Fox Will Follow Disney and Universal Into the World of Theme Parks

Film company theme parks have been a hit in the U.S. and continue to be around the world. Now Twenty-First Century Fox wants in on the fun.

Feb 11, 2014 at 6:27AM

Twenty-First Century Fox (NASDAQ:FOX) is the next entertainment company looking to diversify revenues and take a stake in the large market of film-inspired theme parks around the world. Twenty-First Century Fox World is planned to open in Malaysia in 2016.

The park will be built in partnership with the Genting Group, a Malaysian entertainment company that owns and operates casinos and other entertainment services around the world. Genting is the same company that owns Resorts World Sentosa, one of only two casinos in neighboring Singapore. Genting is not new to these kinds of partnerships, either, as it is the Resorts World in Singapore that houses Universal Studios Singapore. Universal Studios is owned by NBC Universal and parent company Comcast (NASDAQ:CMCSA). Theme park operations have been a lucrative segment for Comcast. The company made $270 million in total theme park income during Q3 2013 alone, up 7% from the same quarter last year.

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Twenty-First Century Fox World will actually be built on the skeleton of an existing theme park, decreasing the costs of construction and time to operation considerably. The renovated and expanded Fox World will span 25 acres and will house more than 25 rides and attractions based on Twenty-First Century Fox films such as Ice Age, Alien vs. Predator, Planet of the Apes, and others. The total cost to Genting for all of this is only $300 million.

Greg Lombardo, vice president of location-based entertainment for Fox Consumer Products, said in an interview to CNN that "We are creating a unique and exciting destination brand with a true global appeal... In the coming months you will be hearing much more." Speaking about the choice of building in Malaysia, he said that based on the growth for this kind of excitement demanded in the region "It was a natural place to for Fox to create our first theme park and marks an important milestone in our global location-based entertainment strategy."

Other than the Universal Studios in Singapore, there are few competitors in the nearby area. Legoland Malaysia, which opened in 2012, offers rides and a waterpark for families. Legoland parks around the world, including two in the United States, are owned by the European entertainment company called Merlin Entertainment Group, which is not listed on the United States exchanges.

Cartoon Network, a subsidiary of Time Warner, is expected to open its Amazone Water Park later in Thailand later this year. The theme parks website tells soon to be visitors to get ready for "Cartoonival, the world's largest aqua playground with over 150 water attractions." The next closest attractions of the kind would be for travels to Hong Kong or Tokyo for Disneyland in either locations.

Disney (NYSE:DIS) is another company that has seen terrific revenue from their theme park operations. The company has seen 9% revenue increases for its parks and resorts segment, beating the company's overall revenue growth of 7%.

Foolish bottom line
Twenty First Century Fox is certainly not the first to the market of building movies-inspired theme parks. Disney and Comcast have already seen huge revenues from their parks and resorts operations. Parks and resorts were 31% of Disney's revenue in 2013, and 16% of that of Comcast for Q3 2013, the last quarter reported.

What makes this an exciting next step for Twenty-First Century Fox is that with the small price tag and a partnership with the lucrative and savvy Genting Group, the company should see a much shorter time from market entry to large profits. This will allow it to reward shareholders much faster than if the company were to start from scratch with a theme park in the United States like its competitors did years ago. 

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Bradley Seth McNew owns shares of Walt Disney. The Motley Fool recommends Walt Disney. The Motley Fool owns shares of Walt Disney. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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