Universal Studios Attendance Drops, Comcast Deflects
Comcast had a bad day on Thursday.
As usual, the corporation reported its fiscal earnings as required by law.
While the numbers sounded good, the stock market reacted in hostile terms.
Comcast stock dropped from $37.54 to $32.56 in a matter of two hours before stabilizing at $33.25.
(Jeff Fusco/Comcast via AP Images)
Generally, Comcast has qualified as one of the most stagnant stocks on Wall Street, making this drop rather alarming.
As a Universal Studios fan, you probably don’t care about the corporate part, but you’re wondering what this means at the parks.
Photo: Comcast NBC Universal
Well, Universal Studios attendance dropped in 2024, but Comcast deflected on details.
So, let’s figure out what just happened.
About Comcast
Image: Associated Press
As a reminder, Comcast owns NBCUniversal, which includes Universal Studios as an anchor business.
Comcast started its NBCUniversal acquisition in 2009, became the majority owner in 2011, and purchased the full company in 2013.
Image: UniversalParksBlog
So, we’re in year 13 of the Comast era of Universal Studios, with the results largely positive.
Sure, some of the Comcast-selected theme park attractions haven’t met our lofty expectations.
Universal
Overall, the parks are better and more popular than they’ve been, though, and they’re about to become dynamic.
Universal Epic Universe debuts during Memorial Day Week, which is four months from now.
Photo: Universal
As such, this is the second-to-last earnings report before Epic Universe impacts the bottom line.
Well, I should add the word “positively” as Epic Universe has been showing up on the balance sheet for a while as a capital expenditure.
Image: Loews
In fact, during the most recent quarter, whose details you may read here, Comcast justified lower revenue by blaming the park.
The report lists “higher operating expenses, including around $35 million of pre-opening costs in the quarter for the Epic Universe theme park in Orlando.”
Photo: Universal
So, Universal is spending about $12 million a month to put the finishing touches on the next great theme park.
This decision hasn’t impacted Comcast’s bottom line in the least. Really, it’s a trivial amount.
Photo: Universal
Comcast’s revenue, earnings per share, and adjusted earnings per share all increased year-over-year.
Those are three primary metrics in evaluating a company’s performance.
Photo: Universal
Comcast’s stock fell due to sustained issues with Peacock and Broadband subscribers. Let’s take a brief look at them.
Comcast’s Other Businesses
Image: Universal
Something you must understand about Universal Studios is that Comcast’s overall performance matters greatly.
Should other parts of the company struggle, Comcast will reduce capital expenditures at the parks to save money.
Image: Universal
The same thing happens at Disney, the other well-diversified titan of the theme park industry.
At this point, theme parks are an oligopoly of two, with the new Six Flags/Cedar Fair hybrid trying to claim the bronze.
Image: Universal
So, NBCUniversal feeds off the financials of Comcast as a whole, and business was good last quarter.
Still, the stock drop reflects Wall Street’s belief that Comcast faces a pair of similar challenges.
Image: Universal
The company has ingrained its business model in linear television.
Now, Comcast is spinning off virtually all its cable channels into a new company, which will be aside from the main entity.
Image: Universal
This leads to a fascinating scenario where CNBC and MSNBC won’t technically be a part of NBC.
Similarly, there’s a bit of mystery about the fate of facets of NBC Sports, and that’s wild to Universal Orlando fans.
Image: Universal
You know the name of the restaurant right beside the park’s front gate. It’s NBC Sports Grill & Brew.
Yes, these changes outside the Universal Studios arena will have ripple effects in and around the parks.
Image: Universal
For this reason, most of the questions on Comcast’s earnings call centered on that stuff, not the parks.
This is how executives deflected attention from another sluggish performance.
What Happened at Universal Studios?
Here’s what we know about the parks. They will obviously remain under the main Comcast umbrella.
The corporate giant is keeping almost everything that is highly profitable and shipping the rest to the new spinoff company.
Universal
So, Universal Studios stays where it is, but it’s a minuscule part of the big picture at the moment due to all the surrounding upheaval.
For the most part, Comcast executives glossed over the parks save for mentioning Epic Universe.
Universal
When they did speak, they got it wrong. According to the earnings report, here’s what we know.
- “Theme Parks Revenue in the Fourth Quarter Was Consistent with the Prior Year Period
- Adjusted EBITDA in the Fourth Quarter Decreased 3.9% to $838 Million, Due to Pre-Opening Costs for Universal Epic Universe…
- Revenue for Theme Parks was consistent with the prior year period, due to lower revenue at our domestic theme parks, driven by lower guest attendance, offset by higher revenue at our international theme parks.
Universal
During the earnings call, whose transcript you can read here, James Armstrong, the CFO of Comcast, said the following:
In 2024, Comcast “saw an unexpected but significant temporary slowdown in theme parks.”
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That’s a reference to the two hurricanes in Orlando last fall. He also added this for context:
“In parks, we are seeing some stabilization after a slowdown in the second and third quarters…with attendance trends improving across most of our parks, including Orlando, solidifying the foundation for our opening of Epic Universe in May.”
Photo: Universal
During other remarks, Armstrong stated: “(We) finished the year strong across our parks globally after having experienced some temporary headwinds in the middle of the year.”
What Does It Mean?
Photo: Universal
In terms of revenue, Universal Studios was flat year-over-year, earning $2.374 billion this year vs. $2.731 billion the prior year.
EBITDA dropped from $872 million in Q4 2023 to $838 million in Q4 2024.
Universal
You’ll note that the difference is nearly identical to the $35 million referenced for Epic Universe
I’d gently point out that this is misleading, though. It’s a blame game stat.
In last year’s financial statement, Comcast listed a dramatic increase in capital expenditures due to Epic Universe.
So, if anything, Comcast spent less on the mostly completed theme park this past quarter.
The CFO’s goal with those comments was to paint a rosier picture since Comcast had to know it was going to get crushed.
Still, we can draw a few conclusions here. The first is that Universal Studios suffered sluggish attendance in 2024.
We already knew that, but this report confirms the matter. However, the most recent quarter could have turned a profit.
The drawback was a pair of uncontrollable weather events that forced park closures and Halloween Horror Nights cancellations.
Photo: Universal
If not for those events, Universal Studios likely would have ended the year strong.
However, this quarter will have something similar, as the CFO indicated the wildfires are sure to impact Comcast’s bottom line.
Image: Universal
So, the final two quarters before the opening of Epic Universe will both have an asterisk on their attendance and revenue totals.
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Feature Photo: Universal
