Demand for theme parks buoys Disney and Comcast

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Costumed workers welcome guests to Walt Disney World's Magic Kingdom.
Costumed workers welcome guests to Walt Disney World's Magic Kingdom.

Despite continued and repeated closures of theme parks around the world -- and the subsequent revenue hit -- current trends in Orlando are providing hope to both Comcast Corp., parent of Universal Studios theme parks, and the Walt Disney Co.

In their most recent earnings reports, both companies said their parks in Florida are profitable, even now when they are operating at reduced capacity.

"It's clear that people want to reconnect with loved ones and spend time together doing things they enjoy, and given the demand we're seeing now, we're confident it will only grow once the pandemic is behind us," Disney CEO Bob Chapek told analysts.

Similarly, Comcast CEO Brian Roberts said, "What we saw this fourth quarter, especially in Orlando, gives us even more conviction about the momentum that our theme parks will experience when we reach a sustainable recovery."

Theme parks, part of Comcast's NBC-Universal division, saw a 63% decline in revenue in the fourth quarter, to $579 million. Excluding $45 million in costs related to the upcoming Universal Beijing Resort, the theme park division broke even for the first time since the pandemic struck.

Guests take a selfie in front of the globe at Universal Orlando Resort.
Guests take a selfie in front of the globe at Universal Orlando Resort.

Revenue for Disney's Parks, Experiences and Products segment declined 53%, to $3.6 billion, in the first quarter of fiscal year 2021.

The decline in revenue was anticipated, according to research firm Global Data, which also noted that Disney's year-old Disney+ streaming service has helped bolster the company's bottom line while parks struggle. But theme parks' decline in revenue will likely be short term, said Rheanna Norris, the firm's travel and tourism analyst.

"High post-pandemic travel demand will allow Disney to easily return its Parks, Experiences and Products to profit if -- and a big if -- operating capacities are lifted," Norris said.

Currently, Disney's capacity is 35%, up from 25% when the parks reopened last summer. Universal said in November it was also operating at around 35% capacity.

While the parks' capacities are reduced, Norris said, operating costs are not always lowered in proportion to the reduction in visitors. Also, vaccine rollout around the world will likely dictate how quickly individual parks recover.

But the timely release of Disney+, and its future tie-ins with parks, such as linkage between the popular series "The Mandalorian" and the presence of the Star Wars franchise in the parks, will be a boon.

"This, combined with pent-up demand, will allow for increased interest in the brand and ultimately drive visitation post-pandemic," Norris said. 

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