Rising expenses for Disney’s Parks & Resorts
The Walt Disney Company (DIS) stated in its fiscal 2Q17 earnings call that in fiscal 3Q17, it expects to incur rising costs for its Parks & Resorts segment business. Disney was asked at the MoffettNathanson Media & Communications Summit earlier in May about what would drive these higher expenses for Parks & Resorts in fiscal 3Q17.
The company stated that when it comes to adding new attractions at its theme parks, a majority of Disney’s expenses consist of pre-opening expenses as well as operational and marketing expenses. Disney also noted that two of its attractions—Pandora and Guardians of the Galaxy, Mission: BREAKOUT!—which are set to open or have already been launched in US (SPY) theme parks, will likely drive the majority of these expenses in fiscal 3Q17.
Disney has also opened a themed hotel in Hong Kong (FXI), with 750 rooms in fiscal 3Q17 that would also add to its expenses in fiscal 3Q17. Other core drivers of expenditures for Disney’s Parks & Resorts business in fiscal 3Q17 include one full year of operations at its Shanghai Disneyland and the dry-docking of its cruise ship the Disney Fantasy for 18 days.
Disney expects the segment’s expenditure in fiscal 3Q17 to grow in the “high single digits to possibly low double digits” on a year-over-year basis.
Comcast’s higher theme park expenditures
Comcast (CMCSA) is another company that expects a higher capital expenditure this year, specifically for NBCUniversal and mainly driven by the rising expenditures of new attractions at its theme parks. In April 2017, Comcast opened a new Jimmy Fallon attraction at its theme park in Orlando, Florida, and will open its Volcano Bay water theme park later this year.
Comcast’s theme parks most recently made up 14% of NBCUniversal’s total revenues of $7.8 billion.
Disney makes up 0.7% of the SPDR S&P 500 ETF (SPY). SPY has 4.3% of its total holdings in the computer sector.