Comcast (NASDAQ: CMCSA) became the first of the country's three major theme park operators to post financial results on Thursday, with SeaWorld Entertainment (NYSE: SEAS) and industry bellwether Disney (NYSE: DIS) set to step up early next month.
The news was largely positive. Comcast's Universal Studios theme parks segment saw its revenue climb nearly 7% to hit $1.6 billion for the seasonally potent three months ending in September. It was the only one of Comcast's four NBCUniversal segments to post a year-over-year increase for the third quarter, but it's not all good news.
Comcast points out that the strong results are largely due to the easy comparison to last year when it posted a 2% decline at its theme parks -- the only one of the four NBCUniversal segments to decline that time around -- as extreme weather and natural disasters ate into attendance at Universal Studios Japan. The segment's two-year top-line gain of 5% isn't all that impressive, especially since ticket prices to most of its Universal Studios attractions have moved even higher in that time.
The news is even less kind at the bottom line, as adjusted EBITDA at its theme parks division rose just 1% in the third quarter, and is down 6% since the same quarter in 2017. Operating costs are rising faster than revenue, and that's rarely a good look.
Check those seat belts
There have been unfavorable rumblings in the industry lately. Disney stunned investors when it posted a rare decline in attendance at its domestic theme parks for the three months ending in June, despite opening Star Wars: Galaxy's Edge at Disneyland during the quarter. It would go on to shake up its theme park executives later in the summer, a sign that things may not improve materially during its fiscal fourth quarter, which ended last month. SeaWorld Entertainment lost its CEO last month, less than seven months after he started.
The strength for Comcast's parks in Thursday morning's report -- basically comparisons in Japan following depressed year-ago results -- also isn't going to apply to either of its peers. SeaWorld doesn't own parks outside of the U.S.; Disney does have a pair of successful gated attractions in Japan, but they are licensed parks that it does not own. In short, theme parks were one of the few bright spots for Comcast this past quarter, but that might not be the case for Disney and SeaWorld.
The signs are out there that this typically busy summer season wasn't exactly great for the leading theme park operators. There have been customer-support layoffs at SeaWorld, and entertainment has been pared back at Disney World. All three operators have been aggressive with promotions these days, news that's great for consumers but on the other side of wonderful for the shareholders. Disney World even recently introduced a discounted midday ticket for folks arriving after noon.
It doesn't seem as if Comcast, Disney, and SeaWorld are benefiting from the boost in consumer discretionary stocks that would normally accompany the seemingly rosy economic scenario. All three operators are also investing in new attractions, so it's not as if they're resting on their reputations. Comcast results still leave Disney and SeaWorld with a lot to prove when they offer up their fresh financials in two weeks. Stay buckled in, because the ride's not over.
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