From: Rich_Koster@agwbbs.new-orleans.LA.US (Rich Koster)
Newsgroups: rec.arts.disney
Subject: Theme Parks
Date: 6 Sep 92 01:50:52 GMT
Organization: The Amiga GateWay BBS * New Orleans, La.

Excerpted from "Electronic Media" August 24, 1992:
 
Profit playgrounds
 
Media titans move into theme parks
 
    Theme parks, once considered a distant offshoot of the entertainment
business, have become profitable for media giants seeking to market and
promote their film, TV and merchandising wares.
    For now, no one does it as effectively as The Walt Disney Co.
    But Time Warner, with its controlling interest in the Six Flags theme
parks, and Paramount Communications, with plans to acquire the King
Entertainment parks later this week, are moving aggressively into theme
parks as a way of furthering their core businesses.  Time Warner, for one,
expects its theme parks to sell $20 million in Looney Tunes merchandise
that it would not otherwise have sold.
 
 - - -
 
    Paramount, which already successfully books its own recently renovated
Madison Square Garden, will be able to quickly capitalize on the huge
amphitheaters at the King Entertainment parks.  "They all can extend the
revenue-generating life of their characters and film properties," said
Jessica Reif, media analyst fo Oppenheimer & Co.  "Acquiring theme parks is
a way of investing in their own core businesses."
    Ms. Reif estimates Paramount's new theme parks collectively will add 9
cents per share to earnings in the first full year.
    Theme parks are considered by Wall Street to be "instantly additive"
for
diversified companies, even though the initial gains are difficult to
quantify.
    Time Warner and Disney have been adept at getting both financial profit
and promotional value out of theme parks.  By contrast, MCA Inc., owned by
Japan's Matsushita Electric Industrial Co., may not realize a return this
year on its Universal Studios facility in Orlando, Florida, though analysts
say the studio facility will eventually make money.
    But even in the meantime, it has yielded promotional and marketing
value
for MCA's other entertainment businesses.
    Destination resort theme parks like those of Disney's in Florida,
California and France, can sometimes have a big impact on the company's
bottom line.  In 1991, Disney's theme parks comprised the company's single
largest revenue producer, even though the theme park segment's operating
income was down 31 percent from the year before.  The theme parks earned
nearly $617 million on a 5 percent decline in revenues of $2.9 billion due
to lower attendance.
    While representing only the second-largest cost in the company,
Disney's
theme parks yielded the single largest return on investment in 1991, even
in
a recession year.
 
 - - -
 
    "The support that theme parks can lend to our film, television and
other businesses is why Walt Disney built Disneyland in the first place,"
said Linda Warren, a Disney vice president charged with making sure all
parts of the company stay informed with each other.  "We can't always
track the empirical flow of dollars, but the benefits of our theme parks
are clearly evident," Ms. Warren said.  For instance, this summer, a Goofy
Parade at Disney World and Disneyland ties into the company's new "Goof
Troop" animated TV show this fall.
 
  [ NOTE: I think the article is wrong about the Goofy parade also being
    at Disney World -- I think it is only at Disneyland. ]
 
    It's expensive to operate theme parks and especially to expand them.
Time Warner this year has spent upward of $30 million marketing its seven
regional Six Flags theme parks.  MCA last year added an estimated $100
million in new rides and attractions to its Universal Studios Hollywood
park, among them the "Backdraft" firefighting walk-through attraction.
Its $60 million "Back to the Future" ride will be open next summer.
    "Theme parks are a difficult business -- it's expensive to do well,"
Disney's Ms. Warren said.

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