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Blackstone Offers to Sell Half of Universal Orlando to NBCUniversal


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http://www.orlandose...0,5366092.story

NBCUniversal now has three months — until June 12 — to accept the offer and buy out the private-equity firm. If NBCUniversal turns Blackstone down, it will trigger a provision allowing Blackstone to seek out an outside bidder to buy the entire resort.

Wow, this is huge. Definitely a story to follow over the next few months.

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The most important quote from that article, in my humble opinion:

...A sale could have huge implications for Universal Orlando. Some of the resort's most important licensing contracts — including its agreement with Warner Bros. for the rights to Harry Potter — include provisions in which Universal could lose those rights if it is acquired by a new owner....

This could get very interesting, indeed.

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Just out of curiosity, but is it known if CBS tried to sell/transfer PP back to Viacom; and when VIA declined, CBS placed the "for sale" status on the parks?

If so, this even further justifies my statement from earlier, although this scenario is slightly different from event that took place five years ago.

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When the assets of the old Viacom were divided between new Viacom and CBS, it was CBS which ended up with the theme parks...as they were seen as low growth, fully developed businesses without much upside potential. The joke ended up being on the new Viacom, as CBS sold the parks for a very attractive price to Cedar Fair...

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Blackstone has taken a few on the chin over the last couple of years. This is an opportunity for them to make a big buck on a recently rejuvenated property and offset their recent blunders/losses. Really not too surprising given their recent history. I thought this could happen, but did not think it would.

On the other hand, with the parks being relatively successful, I wonder what is in it for Blackstone to unload a property with a consistent cash flow. I actually thought they may try to buy the other half if possible, even given their current financials, to help offset the risk of their other investments and various interests.

You've heard it from Gator, you've heard it from Interpreter, and you are now hearing it from me. Watch this closely!

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On the other hand, with the parks being relatively successful, I wonder what is in it for Blackstone to unload a property with a consistent cash flow.

Could it be the theory of sell at the peak of value? Is NBCUniversal or another buyer willing to pay big bucks based upon the current Potter driven success?

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On the other hand, with the parks being relatively successful, I wonder what is in it for Blackstone to unload a property with a consistent cash flow.

Could it be the theory of sell at the peak of value? Is NBCUniversal or another buyer willing to pay big bucks based upon the current Potter driven success?

Ok, here goes:

More than likely, you are correct on selling the park at peak value, even given this economy. There are investors with money and financing, and they are looking for that "sure thing" to offset the recession's lingering effects. Universal could be this sure thing, at least for the short-term. Also, Blackstone obviously is private equity and this is what private equity does. They buy low, cut costs, rejuvenate, and then sell high. That's when it goes right of course.

This could also be, as I alluded to, a case of Blackstone NEEDING to unload one of the shining stars of their portfolio to offset losses that occurred recently. We clearly don't know and in all likelihood won't know this to be true or false. We can speculate knowing that some of their properties and investments got hammered.

Here is where this gets interesting. NBCUniversal which owns half of Universal Orlando is now owned currently, in part (for now) by Comcast and GE; And the other half of the Universal Orlando Resort itself is owned by Blackstone. Interpreter correct me if I am wrong here. I believe I read somewhere, though I can't confirm it, that Comcast is interested in running the resort from afar. Also, GE is wanting out. Speculators and those familiar with recent proceedings note that GE plans to divest its remaining share in NBCU over the next few years. In essence, currently, GE and Comcast would have to come to some agreement as to whether or not NBCUniversal wants to buy the remaining stake. It remains to be seen if they will as GE wants out (and can use the cash), and Comcast has not really stated if they are interested all that much in running the Resort. This makes for a very volatile situation.

This could also be a way for Blackstone to purchase the remaining stake in Universal through the back door at a reasonable price from Comcast/GE, if they say, "We really don't want this property, you take it, and just pay us some share of the profits or royalties or whatever else could be agreed to.

My personal thoughts:

I have a feeling this will drag on and on well past this year. I have a feeling Comcast will realize they don't really want to manage the day-to-day of the parks, but they also don't want to say "no" to buying the other half of Universal Orlando as it is a consistent revenue stream. I could see a majority ownership transferred to Blackstone at a reasonably attractive price that keeps both companies in the profit loop without landing on the grenade and just taking a big lump sum payment for the resort if Comcast cannot afford the other half of the property (or does not want it).

A company like Blackstone knows full well what they are doing. We will see how devious they may be, or not. They may just need to make a buck!

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I can't believe I had missed this topic until now...these are my favorite types of discussions on KIC :)

I'll again throw out the idea I've floated in a few different threads on this topic...instead of selling/buying the parks to some other entity, what if Blackstone & Universal would combine their portfolio of theme park properties and spin it off as a separate entity in an IPO? If you would combine the Merlin Entertainment properties with the Sea World Parks & Entertainment and Universal Theme Parks that would be quite the global collection! (I don't believe the planned Merlin IPO ever went thru...but even if you take Merlin out of the mix, just the Sea World & NBCU parks make up a pretty impressive chain...)

Then, Blackstone & NBCU/GE/Comcast could split the proceeds of the public offering based on the value of the assets each was contributing. Those companies are now free & clear of the parks on their balance sheet, yet current management could be retained in the new spin-off so that park operations could remain consistent. (Blackstone/Comcast/GE could even keep a token interest in retained stock if they desired...)

I thought the comment about the value of Spielberg's consulting contract (from the article Interpreter posted) was really interesting...I'd love to see the math on how they calculate that value :)

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