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View Full Version : Vivendi Universal Reports First Half 2002 Results - MSN, 8/14/02



Darkbeer
08-14-2002, 04:30 AM
OK, the Vivendi Universal second quarter numbers are out, and it is a mixed bag....looks like the Houghlin Mifflin Book Publishing is the first US asset that will be sold to raise cash.....

http://n05.moneycentral.msn.com/ticker/article.asp?Symbol=US:V&Feed=BW&Date=20020814&ID=1856844

Universal is one of the stars of the company...





Consolidated operating income grew 8% to 2.4 billion euros, primarily driven by Vivendi UNIVERSAL Entertainment (VUE) and Cegetel, and to a lesser degree Environmental Services and Vivendi Telecom International. Operating income from businesses owned more than 50% declined 6% to 469 million euros





Now the company report states that the attendance at Universal Studios Hollywood is up.






Recreation reported 20% lower revenue, as lower per capita spending more than offset higher attendance at Universal Studios Hollywood as well as lower management fees from Universal Studios Japan.





Now, the problem is that the amount of money the average in-park guest spends is down. Based on my own personal opinion (plus what Disney stated in its third quarter report - see below), the promotions of the low cost AP's, and the child free with an adult admission causes two problems. First is the lower total admission revenue, if you have more AP's and child "comp" tickets, you are collecting a lower average price per guest entering the park, also, this type of guest will not spend as much in the gift shops, etc....

This is an issue that was brought up earlier in the year, Disney was more focused in raising the average vacation stay, trying to have people spend more time per visit, bringing in a group that would spend more on meals and souvenirs, and more revenue to the resort in general (Promotions like 3 and 4 day ParkHoppers at a discount). They then decided that they needed to get the "attendance" count up, no matter what, even after announcing that they would not offer "discount" admissions. The resort made a 180, and brought back the "buy an Adult admission at the Child's price, and get a Child's ticket for free", plus a new discounted two-day SoCal ParkHopper. And while this promotion, plus the Rockin' the Bay music series helps to bring in/back local guests, it does not help sell Hotel rooms, or multiple meals (A family would pick up Breakfast on the way to the park, and grabs a late night snack on the way home), so we are having the same problem USH has, but even with the discount tickets, the DLR attendance is down, both at Disneyland and DCA. (Based on the Third quarter information released by Disney, plus the comments that they don't expect the fourth quarter to match last year's numbers). Here is a quote from Disney's third quarter report - "Lower guest spending at both Walt Disney World and Disneyland was due primarily to a higher mix of local guests, which tend to spend less per visit, in combination with various other promotional programs. "

We also know that Knott's attendance and in-park spending is up over 1% per its second quarter information, plus we know that Six Flags attendance is down 7.5%, but the in-park per guest spending is up 9.6% per its second quarter release. Anheuser-Busch (Sea World) second quarter report is less specific, but we do know that that the park division revenue is up 5% over last year.

So lets look at the summary, based on the stock market information released this week...

ATTENDANCE

Knott's - UP
USH- UP
Sea World - ?
Six Flags Magic Mountain - ? (The parks in general are down, no breakdown per park)
Disneyland - Down
DCA - Down


IN-PARK GUEST SPENDING

Knott's - UP
Six Flags Magic Mountain - UP (If the parks in general is up almost 10%, this is a good presumtion)
Sea World - UP (If total revenue is up 5%, this is a safe presumtion)
Disneyland - Down
DCA- Down
USH- Down

So out of the five main theme park companies in Southern California, only Disney is down in BOTH attendance and in-park guest spending.

And now the question is why, all the parks got hit with the economy and travel worries, why is Disney the underperformer in this group, even after adding a new park and hotel???

Frees
08-14-2002, 09:53 AM
Now, this is going to seem like a bit of an oversimplification, but...

Have you ever played Roller Coaster Tycoon?

If you're not familiar with it, the point of the game is (like the title suggests) to build amusement parks and rollercoasters. It's a sim genre game that puts all the tools of design and development at your command and a budget that limits what you can and cannot do. You can improve existing parks with problems, or you can build an entire park from scratch to your own specificiations. As you build, guests come in, pay money for admission, rides, and food and drinks while they're there and react accordingly with how much effort you've put into the park, prices, etc.

If you offer a wide variety of foods, souveniers, rides, themeing, etc. then guests remain happy and more and more come into the park, providing you with more money to expand, add new rides, and whatnot.

What makes guests unhappy? High prices for admission and food. Each guest has a set amount of money and if too much is taken away at the gate, they'll spend less on food while they're there. Guests also like exciting rides. They respond well to standard carnival style rides in the beginning when the park is sparse, but after a few years, the well designed, custom roller-coasters keep them coming back. Themeing is also key, as is an adequate staff to support the number of guests you've got. Keeping the park new and fresh is also important. Even if a ride is extremely popular, after a few years (time goes by fairly quickly in the game) if loses it's wide appeal and new things should be built to keep increasing your numbers and keep the park in the black.

Just adding new things to the park, however, does not mean that it will increase guest numbers. If guest opinion about your new attractions is low, more will not come, but rather less. You can suddenly drop gate admission and alter prices throughout the park at any time if you're in a cash emergency, to bring alot of people in at once, but it'll only work for so long. Long term planning pays off in the long run. If you build things well, spend the money you have to, and focus on every area of the park, making sure that every attraction has good guest approval, you'll do very well in the game.

Just an funny little observation.

Lani
08-14-2002, 11:15 AM
Vivendi Universal Reports First Half 2002 Results (http://n05.moneycentral.msn.com/ticker/article.asp?Symbol=US:V&Feed=BW&Date=20020814&ID=1856844) - MSN, 8/14/02

Vivendi, parent company of Universal Studios, has released its fiscal results for the first half of 2002, and Chairman and Chief Executive Officer, Jean-Rene Fourtou announced three priorities: 1: Reducing debt. 2: Improving the profitability of the businesses. 3: Determining a long-term strategy for Vivendi Universal.

QuikQuote: "Net income was a loss of 12.3 billion euros, representing negative 11.32 euros per basic share, for the first half of 2002. ...

"The company is committed to raising at least 10 billion euros through asset sales during the next two years, 5 billion euros of which will be completed during the next 9 months."

coronamouseman
08-14-2002, 06:56 PM
A couple more observations on "comparative statistics":

(1) Want to achieve a really high growth rate? Try starting out with a very low number ........

(2) Want to achieve a really low growth rate? Try starting out with a very high number ........

Disney parks have to work a lot harder to get a good growth rate: If you are the WDW MK park and you draw 14M visitors the year before, you have to draw 1.4M visitors to achieve a 10% growth in attendance; if you are Sea World and you draw 5M persons the year before, you only have to draw 500,000 more to have 10% growth

So while local parks such as Knott's or SFMM can pour on the discounts, Disney parks, by nature of a certain dependence upon vacation destination resort travellers, are very much more vulnerable to poor statistical performance and to worldwide issues which affect vacation travel (read about American, United and US Air lately?)

I personally believe that the only statistic Disney is really interested right now is the attendance numbers - no matter what happens with revenue or per/guest expenditures, I believe that the attendance number is what they feel conveys their command of the marketplace and they will do whatever it takes to keep those numbers at a high level.

Darkbeer
08-16-2002, 12:32 AM
Here is one more stat, courtesy of Screamscape....

http://www.screamscape.com/html/six_flags_parks_m-n.html





The latest word from Six Flags is that SFMM is actually up 3% over last season, which is remarkable considering that they lost X for most of the busy summer season. While nothing is firm, the latest Six Flags financial report mentions that parks that performed well this season will be receive new attractions for next season as well.




So SFMM is up 3%, without much special discounting (than the normal) and with its number one attraction closed.......