Coverage: Comcast buys stake in Universal Studios Japan

U.S. media giant Comcast bought a 51 percent stake in Universal Studios of Japan, costing the Philadelphia-based company $1.5 billion. The deal comes as Comcast sets its sights on Asia after its takeover bid for Time Warner failed earlier this year.

Emi Emoto and Taiga Uranaka of Reuters had the news:

U.S. cable company Comcast Corp said on Monday it has agreed to buy a 51 percent stake in Osaka-based theme park operator USJ Co for $1.5 billion.

Comcast said in a statement Goldman Sachs Group Inc, Seoul-based private equity firm MBK Partners and others will retain a 49 percent stake in USJ, the operator of Universal Studios Japan.

The deal gives USJ an enterprise value of $6.2 billion, Comcast said.

Comcast owns Universal Studios and as well as Universal Theme Parks through its NBCUniversal unit.

Bloomberg’s Tesun Oh and Monami Yui explained the recent success of the theme park:

Sales and visitor numbers at the 14-year-old Japanese theme park had hit a record high following a revamp, with a $400 million Harry Potter attraction which opened July last year helping the number of foreign visitors to double to about a million, according to USJ.

“The new Harry Potter attraction had an impact and brought a lot of customers,” said Katsunori Dobayashi, an analyst at Iwaicosmo Securities Co. In addition to visitors from overseas, the theme park was also able to draw more Japanese, including repeated local customers, with concepts unique to the country such as an “Attack on Titan” ride, Dobayashi said.

USJ had sales of 138.5 billion yen in the fiscal year ended March 2015, up 44 percent from a year earlier, while operating profit rose 61 percent to 39 billion yen, both all-time highs, spokesman Johta Takahashi said earlier Monday.

Record Visits

The Universal Studios Japan theme park, which opened in 2001 as a joint venture between Osaka city and a group of private companies, also received a record 12.7 million visitors in the fiscal year through March 2015, up from 10.5 million, according to Takahashi.

Leo Lewis of The Financial Times explained why Goldman Sachs and the park’s other partners would want to sell their stakes:

Comcast is buying a 51 per cent stake in USJ from Goldman Sachs, MBK Partners and other members of the consortium that, in 2009, bought the struggling theme park operator for Y111.2bn just two years after it had listed in Tokyo.

Universal Studios Japan is one of just a few Japanese theme parks that remain profitable as the demographics of the world’s fastest-ageing nation take their toll on an industry aimed predominantly at the young. Universal’s 14-year battle to draw crowds has been fought in the shadow of Tokyo Disneyland, which attracts roughly three times as many visitors.

As well as heralding Comcast’s plans for more overseas dealmaking, Monday’s stake sale hints at the sellers’ concern over the momentum of Tokyo stocks as China fears weigh and the impending Y11.5bn IPO of Japan Post hangs over the market.

Goldman and its partners had planned to relist USJ this year, and, according to insiders, remained enthusiastic for that project until mid-August when the benchmark Topix index began a slide that has since seen it shed over 14 per cent of its value.

In recent weeks, however, Goldman is understood to have convinced its partners to consider selling a controlling stake to a third party. Via its NBCUniversal business, Comcast already owns the two main Universal Studios theme parks in Hollywood and Orlando.

Monday’s deal values USJ at Y750bn and leaves Goldman and its partners, who include USJ’s chief executive Glenn Gumpel, with a 49 per cent stake in a business that recently posted record profits on soaring visitor numbers.

Atsuko Fukase of The Wall Street Journal explained why Comcast is interested in expanding its presence in Asia:

Brian Roberts, the cable-television giant’s chief executive, said the deal would help the company’s media subsidiary, NBCUniversal, close the gap with U.S. competitors, which have a head start overseas.

“We had this ambition really since the beginning of our purchase of NBCUniversal,” Mr. Roberts said in a news conference in Osaka, the center of Japan’s second-largest metropolitan area. “We see Comcast and NBCUniversal becoming a more global company.”

The company sharpened its focus on Asia after canceling plans to acquire Time Warner Cable for $45.2 billion in April, following objections from regulators. The theme-park business is growing rapidly in the region, especially in China.

Comcast subsidiary Universal Parks & Resorts last year announced plans for a new theme park in Beijing, while Walt Disney Co. is set to open Shanghai Disney Resort next year. Six Flags Entertainment Corp. said last year that it would build multiple Six Flags parks in China over the next decade, while Chinese property giant Dalian Wanda Group Co is setting up more than a dozen amusement parks.

An influx of Chinese tourists over the past few years has helped to revive the fortunes of some of Japan’s theme parks, which had slumped after the bursting of the country’s economic bubble in the early 1990s ended an industry boom.

The number of foreign visitors to Universal Studios Japan has doubled since the park opened a Harry Potter-themed attraction just over a year ago, the company says. Overall, more than 12 million people visited in the latest financial year, up from 10.5 million a year earlier.

So far, the Chinese economic slowdown doesn’t appear to have taken a toll on tourism to Japan. Nearly 600,000 Chinese visited Japan in August, according to the Japan National Tourism Organization, more than double the total a year earlier.

Universal Studios Japan opened in 2001, and six years later the company made its debut on the Tokyo Stock Exchange’s Mothers market for startups. But, struggling with decreasing visitor numbers, USJ was delisted in 2009, when it got a capital injection from Goldman.