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Why Comcast Is Buying 100% of Universal Studios of Japan

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Comcast already owns 51% of USJ

Comcast (CMCSA) said in February 2017 that it had decided to take full control of USJ (Universal Studios Japan). It already owns 51% of USJ and is now buying the remaining 49% from a group of investors that includes Goldman Sachs (GS), hedge fund Owl Creek Asset Management, and private equity firm MBK Partners.

Comcast is paying $2.3 billion for the stake in USJ that it does not already own, implying that the deal values the assets at $7.4 billion.

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Asian park attendance and spending

Comcast is moving to take full control of USJ at a time when the Asia-Pacific theme park market is forecast to grow steadily over the next few years. According to estimates by Wilkofsky Gruen Associates, theme park attendance in Asia could grow from 404 million in 2015 to 540 million by 2019, suggesting an average annual growth rate of 6.7% over a five-year period. 

Theme park spending, on the other hand, is expected to expand at an average annual rate of 8.8% to reach $20.0 billion by 2019 from $14.0 billion in 2015.

For Japan (EWJ) in particular, theme park spending is projected to reach ~$9.0 billion by 2019 from $4.5 billion in 2009, as illustrated in the chart above.

What does Comcast get?

The forecast size of the Asian and Japanese theme park market implies a huge growth opportunity for USJ and thus, potentially more theme park revenues for Comcast. The acquisition of USJ also gives Comcast the opportunity to compete with theme park rivals such as Walt Disney (DIS) in offshore markets.

The deal to acquire 100% of USJ could also be seen as a way for Comcast to compensate for the loss of the Time Warner Cable acquisition. Comcast had drawn a budget of $45 billion to buy Time Warner Cable before regulators rejected the deal. Time Warner later sold to Charter Communications (CHTR).

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