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Since the opening of its first theme park in the Summer of 1990 in Orlando, Florida, Universal Resorts has been competing against Disney World (DIS) , its biggest rival theme park, to win over theme park aficionados and become the top contender among all.
Although Universal's theme parks have helped Comcast, Universal's parent company, grow and have been a great way to promote the brand, they are one of the hardest sectors to upkeep.
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The ever-evolving economy is a major factor impacting people's ability to visit theme parks. The financial implications and outcomes are hard to predict, keeping the company in a constant state of uncertainty.
Although Universal allocates a budget for the Universal Resort's upkeep and labor costs, doing routine maintenance, renovating, and developing innovations to keep people interested in visiting the parks are very costly.
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Nonetheless, the multiple hurdles associated with theme parks seem to outweigh the positives, which has prompted Universal to make big-budget investments in this sector over the last few years.
Universal invests in its theme parks for a costly price
Comcast's last reported earnings that its total revenue grew by over 2%. This growth was driven partly by the Universal theme parks, as they have begun stabilizing over the previous two quarters after facing some tumultuous financial times caused by lower guest attendance.
In the fourth fiscal quarter of 2024, theme park revenues increased by 0.1% compared to the year prior. However, operating expenses were up 2.4%, which caused the adjusted theme park revenue to decrease by 3.9%.
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"To put 2024 in perspective, we dealt with potentially the most competitive environment we faced in broadband, saw an unexpected but significant temporary slowdown in theme parks, and made major investments in our key growth initiatives," said Comcast CEO Jason Armstrong in an earnings call.
These investments aim to position the parks for long-term success, even with increased costs, which have prompted Comcast's total adjusted EBITDAgrowease by 54.2% for the fourth quarter of 2024.
Universal announces a first-of-its-kind park in a new state
In December 2023, Comcast's (CMCSA) Universal Destinations & Experiences announced it would create its first-ever theme park concept for families with younger children but didn't provide many details on which franchises would be featured or gave a potential opening date.