Disney in talks to buy Universal

[donrulz]

I just heard a news report on t.v. that Disney is in negotiations to purchace Universial Studios and Island of Adventure. Has anybody else heard this? I don't have a problem with this as long as they keep it seperate from the Disney theme.

 

[Tink]

I saw that too. So I laughed to myself, thinking the first thing that they are going to do is take away all of the perks to staying on-site - like head of the line status to resort guests.

Sorry, I am one of those who REALLY miss EE. Do you know how many times DD could ride Dumbo when we got there early. I hate waiting on line for that.

That is going to be one interesting story to follow. I guess it's one way to knock out the competition.

 

[paulh]

i have read the same report in the orlando sentinal

 

[treesinger]

I need juicy details!! Like, the likelihood, timeframe, etc. Anybody have that kind of info?

 

[SQUIGGLE]

This was just reported on our local ABC channel too. No details; just that they are talking. Guess that's one way to get a park full of roller coasters.......They did mention that Disney stock might drop if it happens. Not being a stock market person, I wonder why? Anyone out there know?

 

[raidermatt]

They did mention that Disney stock might drop if it happens. Not being a stock market person, I wonder why? Anyone out there know?

Without looking closer at Disney's balance sheet and earnings outlook, or knowing the details of the deal structure....

My initial response is it would increase Disney's debt load, which is already somewhat of a concern.

 

[DISNEYWORLDBORN2SHOP]

What happens to the parks when they buy up the competition and they no longer have to compete for the tourists?

 

[SQUIGGLE]

raidermatt - thanks for quick response. I knew it had to be a logical reason; but I didn't think of that.

 

[mickeysgang]

Can you imagine what the price of Passes will go up to?
No normal family will be able to afford them.

 

[MineeBaby]

Maybe if it did happen, they would have a "Disney Magic" Pass, a "Disney's Universal" Pass, and then the all park pass....OR..seeing as how its hard enough now to have a week long family vacation and see everything you want, they might continue with the park hopper passes, keeping them the same prices, realizing that people are going to either want to stay longer to see everything, or come back more often to see it all...who knows for sure though. it would be interesting because the hotels would need to be bought out from Loews or would stay a separate entity from Disney as an offsite hotel...strange..

 

[DEE DEE]

What is wrong with this picture? How can Disney buy UO and IOA when they can not even afford to keep the air conditioning going at night at a lot of the rides.They are going to develop such a mildew problem that the odor is going to keep everyone away.Also the water is going stagnate and bring the West Nile Virus from the mosquitoes. We stayed at the Carribean Beach and had no problems until they started with the cost cutting and stopped spraying and had so many mosquitoes in the room it was awful.

 

[Jay'sPrincess]

My first thought was...

"Would the government actually allow this???"

 

[buzz2400]

I understood it as they were talking about acquiring some of Universal's assets such as the movie industry. I hope they don't buy out the parks. I personally like Islands of Adventure better than any of the Disney parks.

 

[Peter Pirate]

"Some of Universal's assets" would include first and foremost the theme parks...But if you like them now nothing will change. Disney wouldn't be tearing down Spiderman or Deuling Dragon's or anything...As to the government, there would be no anti-trust issues that I could forsee...

 

[CWIPPERMAN]

Here's the article from the ORLANDO SENTINEL


Disney might make play for Universal

By Robert Johnson | Sentinel Staff Writer
Posted August 9, 2002

Mickey Mouse and Spider-Man roaming the same theme parks? The idea might not be too far-fetched.

Analysts and tourism officials were intrigued Thursday by a Disney official's comment that the company could be interested in buying some assets of debt-ridden Vivendi Universal, which owns such parks as Universal Studios and Islands of Adventure.

"Any assets that are in our core business that come available, we would certainly take a look at," Disney Chief Financial Officer Thomas Staggs told Reuters news service. "Our primary focus is our core business."

Rumors of a sale have been swirling since embattled Vivendi CEO Jean-Marie Messier was ousted and replaced by Jean-Rene Fourtou, who said he plans to lower Vivendi's debt load by "significant asset disposals."

Selling off its entertainment business -- which includes theme parks, movie studios and television -- could be a quick way for the conglomerate to reduce debt without cutting off its core assets in the sewer and water industry.

Analysts said such an acquisition by Disney could erode its current efforts to strengthen its balance sheet and slumping stock price. But Staggs said, "To the extent we can do an acquisition that is not dilutive to the earnings or cash flow, we'll take a look."

The price would have to be "bargain-basement" to make good business sense, said Katherine Styponias, an analyst at Prudential Securities. "Owning more theme parks could make Disney even more cyclical because that's a cyclical business," she said.

Besides, although Disney has the borrowing power to make such a purchase, Styponias said that "given where their stock is, this might not be the best time for a major acquisition."

Shares in both Disney and Universal are trading near 52-week lows. Stock in Disney closed Thursday at $14.50 a share, up 60 cents. That compares with a 52-week range of $13.75 and $27.98.

Vivendi stock closed at $16.32 on the New York Stock Exchange, compared with a 52-week range of $13.36 to $59.35.

Disney and Universal have battled each other on the Orlando tourism front since the latter opened here in 1990.

"Owning Universal would give Disney World a huge increase in marketing power," said Peter Stapp, a theme park consultant who has been a supervisor at both properties. "Disney would get two more jewels in their crown and be able to offer tickets to both."

Disney's huge bus system also could funnel tourists back and forth. "It could mean a lot more convenience for visitors, and they might stay longer," Stapp said.

Advertising and leisure industry veteran Peter Yesawich said that the possible combination is intriguing. "You could package more exciting vacations with more options."

One possible downside cited by Yesawich: Less competition in the pricing of tickets and rooms. Another could be wages, "There wouldn't be as much pressure to pay more in this job market."

Robert Johnson can be reached at rwjohnson@orlandosentinel.com or 407-420-5664.
Copyright © 2002, Orlando Sentinel