Comcast (NASDAQ:CMCS.A) offered up the earnings season's first look at the theme park world, and as expected, the news wasn't pretty. Life is pretty hard when your gated attractions have been closed since mid-March, and that became evident when Comcast's theme park checked in with a 32% year-over-year revenue decline through the first three months of the year. Adjusted EBITDA clocked in a blistering 85% lower for the quarter.
Disney (NYSE:DIS), and to a slightly lesser extent SeaWorld Entertainment (NYSE:SEAS), have a lot in common with Comcast's Universal Studios theme parks. Disney and Universal have year-round theme park resorts in Central Florida and Southern California. All of their parks were shuttered during the second weekend of March. They both have interests in Asian theme parks that closed earlier in the quarter. SeaWorld's most popular parks are also located in Central Florida and Southern California, but it also has attractions in Texas, Virginia, and Pennsylvania that rely largely on local traffic. No matter how you look at it, all three companies are hurting right now, with their parks closed for the past seven weeks.
You must be this tall to ride
Comcast didn't offer a timeline on when its domestic parks will get their turnstiles clicking again. It did point out that it will post an EBITDA loss of roughly $500 million for the segment this quarter if its parks remain closed through the end of June.
Asked about breakeven levels for the parks in light of the suggested opening in phases that would initially limit guest counts to 50% and then 75% of capacity, Comcast suggested that it could break even at 50% of its normal capacity. However, even that may prove ambitious, since international and possibly even out-of-state travel isn't likely to bounce back anytime soon. Comcast is fine with that scenario. It accepts that getting the parks open in any capacity is important even if it's not a moneymaker from the start.
"If we open and have lower attendance -- at the lower end because our priority is going to be to make the parks safe, and so we're not going to push for attendance -- but at pretty low levels of return attendance as things ramp up, we'll be in better shape than were the parks to be closed," Comcast said during its earnings call on Thursday.
In short, Comcast realizes that it's going to be a slow ramp up no matter when it reopens its parks. It probably won't hesitate to get them going even despite the long list of safeguards that will make the experience less than ideal for its employees as well as guests. Its current stance on both coasts is that Universal Studios Hollywood and Universal Orlando are closed through the end of May. California isn't likely to reopen next month, but its larger resort in Florida could. With Disney's most visited theme park located in Central Florida, as well as half of SeaWorld's attractions located in the middle of the Sunshine State, all three publicly traded theme park players are champing at the bit to get rolling.
Comcast offered other insights into the state of its theme parks. Construction has halted at Epic Universe, the new park located near Universal Orlando that was previously set to open in 2023. Construction crews at Central Florida's theme parks have generally paused their work since mid-March, but Comcast claims this is being done so it can "focus on the immediate challenges" that COVID-19 presents. Is Comcast referring to preserving its cash flow or just structural changes that are now being considered, given the new normal where sanitation will be a bigger part of the future theme park experience? Will Epic Universe open in 2024? This remains a fluid situation.
On the more positive front, Comcast still expects to open Super Nintendo World in Japan later this year. It was originally expecting to open the new buzz-generating expansion in time for this summer's Olympics, but with the games pushed out to next year, it's comforting to know that Universal Studios Japan is still eyeing a 2020 debut for the new land that will come to Universal Studios Hollywood in 2022 and Universal Orlando whenever Epic Universe is ready.
The lack of construction also doesn't necessarily mean things will be delayed. A positive story is Universal Studios Beijing, a park that is on time and on budget to open in 2021. It had 12,000 construction workers toiling on the project before the coronavirus crisis hit, but after an understandable delay it now has more than 15,000 people working at the site.
Disney and SeaWorld investors will get a read on their companies in the week ahead. Disney reports on Tuesday afternoon, and SeaWorld follows on Friday morning. SeaWorld was betting on fresh roller coasters at its parks to draw big crowds this summer, and Disney has a full slate of new rides and attractions coming to Disney World and Disneyland.
With most of Florida in the process of lightening the restrictions on businesses this week, it's a good bet that analysts will be asking both companies for insight on when they can get their parks operating again in some capacity. Comcast and Disney have larger media businesses helping offset the closed attractions, but theme parks are still the engine that drives leisure markets and brand awareness that is so critical these days.