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Can Comcast’s Universal Parks Capture Market Share from Disney?

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Jun. 28 2016, Updated 12:06 p.m. ET

Comcast plans to overtake Disney

Comcast (CMCSA) and Walt Disney (DIS) are major players in the theme parks business. Comcast stated at the Guggenheim Securities TMT Symposium in New York this month that in cities like Orlando, Disney has traditionally had a 75% market share while Comcast’s Universal theme parks have a 25% market share. However, Comcast is hoping to change this disparity.

Comcast has been adding a new attraction to its Universal theme parks every two to three years and is also planning to open a new hotel in Orlando. The company stated at a Morgan Stanley (MS) conference in March of this year that it’s planning to open a water park in Orlando. The company said that its hotels in Orlando have excellent occupancy rates of about 90%.

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Comcast is also set to unveil a King Kong attraction in Florida. In April, the company opened a Harry Potter theme park in Hollywood. At a J.P. Morgan (JPM) conference this year, Comcast stated that the Harry Potter theme park in Hollywood has boosted the theme parks’ attendance and per capita spending by 30% and 40%, respectively, year-over-year.

Comcast’s acquisition of DreamWorks would also give access to popular DreamWorks Animation (DWA) franchises such as Shrek, Madagascar, and Kung Fu Panda. If completed, this acquisition could result in Comcast using the DreamWorks Animation franchises to add new attractions at its theme parks.

Comcast’s theme parks in fiscal 1Q16

In 1Q16, Comcast’s theme parks segment saw revenues of $1 billion, up by 57.5% year-over-year. It had an OIBDA (operating income before depreciation and amortization) of $375 million. The segment benefited from higher per capita guest spending.

Comcast expects the capital expenditure to rise by about 10% in 2016 for its NBCUniversal business. The company plans to continue to invest in its theme parks and to consolidate Universal Studios Japan (EWJ). In 3Q15, Comcast acquired a 51% stake in Universal Studios Japan.

Comcast makes up 0.85% of the SPDR S&P 500 ETF (SPY). SPY also has 3.5% exposure to the computers sector.

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