Comcast Corporation’s (CMCSA) recently merged entity NBC Universal plans to acquire the remaining 50% stake of Universal Orlando Resort’s theme parks from Blackstone Group L.P. (BX) for nearly $1 billion.
The Universal Orlando Resort is a joint venture between NBC Universal and Blackstone Group. The resort boasts three of the most popular theme parks namely Universal Studios Florida, Universal’s Islands of Adventure and Universal CityWalk. It is also the second largest resort in Orlando after Walt Disney World Resort.
In the last quarter, NBC Universal’s theme park segment contributed 2% of the total revenue marked by an improvement of 16.1% year over year. The newly opened Harry Potter Island in the Islands of Adventure is one of the prime revenue drivers for this segment.
Blackstone Group is an alternative asset management and financial services company that invests in other companies’ assets. In 2000, Blackstone Group entered the Universal Orlando venture with investments of nearly $275 million. So it is expected that they will get a better return after selling their 50% equity interest to Comcast-owned NBC Universal group.
The deal is expected to close on July 1. In synergy with this deal, Comcast will issue senior notes worth $400 million to NBC Universal and the remaining will be financed by cash.
On January 29, 2011, Comcast completed the acquisition of NBC Universal from General Electric (GE). Comcast currently holds a 51% stake in NBC Universal while General Electric holds the remaining 49% stake and plans to reduce it to zero within a period of seven years. Following the acquisition, the company has become the largest cable MSO (multi-service operator) in the US.
We maintain our long-term Neutral recommendation for Comcast. Currently, it has a Zacks #3 Rank, implying a short-term Hold rating on the stock.
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