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Pigs in Pythons: Capex at Disney and Universal


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Over 2011 and 2012 Disney are adding two new cruise ships, a hotel and timeshare in Hawaii and have projects in California, Florida, Hong Kong and Paris.  It’s clear that this is seen as a balloon in spending for the moment.  Bob Iger (President and CEO) is reported as saying: “Our intention right now is to, after the 2011-2012 period, is basically to return to what was more of a steady state. …We don’t really see in the near horizon, other than one project, anything of real size that would create a significant increase in capex after we get through the current commitments. …We are, as everyone knows, pursuing the possibility of a theme park in Shanghai. And that will be a partnership, therefore the capital investment in that is not all ours.”

On the subject of opening up new Disney parks he says, “I don’t think that it would be smart for the company, either with our own money or with third-party money, which would be easy, to put a theme park in every major population center of the world. And believe me, there’s a line that – I wouldn’t say it’s very long – but there’s a line of people that would gladly put up capital to get a Disney theme park for a region. There’s Russian money, there’s Indian money, there’s Southeast Asian money, there’s Latin American money for all of that….And I’m not suggesting that Shanghai will be the last park the company ever builds – it’ll be the last one that’s ever built while I’m around.”

Below you can start to see the trotters of the massive Disney pig as capex ramps up in 2010.  Revenue dips in 2009 and there is sluggish revenue improvement in 2010 as consumer spending picks up.

disney theme parks capex revenue 09 010 graph


Just for interest, looking at Universal’s profile below we can see the lump of the Potter piglet digested down to its curly tail, and the effect of magical revenue soaring upwards by the end of the third quarter in 2010.   (Universal, like Disney had a bleak 2009 but recorded a 27% leap in total theme park revenue for the 9 months to the 26th September 2010 compared to the same period in 2009.  Disney achieved just a  1% increase for the full year to October 2, 2010 vs 2009.)  With no major projects planned at Universal for 2011, The Wizarding World is still tipped to be the biggest draw in Orlando this year and we look forward to Universal’s full year results.  Disney must be hoping that they can create similarly spellbinding returns.

universal theme parks capex revenue 09 010 graph


Quotes from Goldman Sachs Communacopia XIX Conference (21/9/10) and Bank of America Merrill Lynch Media Communications & Entertainment Conference (16/9/10)

Figures from SEC filings.  Capex = cash capital investment in property, plant and equipment.  Revenue = total theme park and resort revenue.



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