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. Last Updated: 07/27/2016

Disney Tries to Milk Theme Parks for Cash




ANAHEIM, California -- Walt Disney Co. is often thought of as a movie studio and television broadcaster, but theme parks remain Disney's cornerstone, helping to pull the company through good times and bad.


The theme park division of the company has made more money for Disney than its movie business in the last three years, out-earning the studio by well over $1 billion last year.


Theme parks accounted for about 26 percent of the company's $23.4 billion in revenue last year, but garnered 42 percent, or $1.5 billion, of Disney's $3.4 billion operating profit.


The strength of its theme park business and the prospects for its future are why Disney said Friday that it is developing a third theme park for its Disneyland Resort complex. Disney's announcement comes as it is finishing a second park in Anaheim, where it invented the theme park business 45 years ago.


Disney already plans to open four new theme parks in five years, a record pace for the company.


California Adventure, a companion park to Disneyland, will open its gates in Anaheim in February. That's followed by a second Japanese park, Tokyo DisneySea, debuting later in 2001. A second park will open at Disneyland Paris the following year, and a Hong Kong version of Disneyland will see its first visitors five years from now.


The new parks represent several billion dollars of investment for the company, which in recent years has plowed more capital into its theme parks than any of its other divisions.


"Over the next 25 years, I could see Disney opening a half-dozen parks internationally," said Richard Read, an analyst with Credit Lyonnais Securities in New York. "Brazil, India, Mexico f anywhere where there are enough people with a high enough income to make it work."


Thomas Staggs, Disney chief financial officer, said because of their close link to Disney's stable of animated characters, the theme parks help drive Disney's consumer products business f everything from clothing to toothbrushes f and video sales. This is especially true abroad.


Within five years after Disneyland Paris opened in 1992, sales of Disney products rose eightfold in Europe, Staggs said.


Staggs said by 2002 the theme park division will be generating $1 billion for Disney annually, the result of the flurry of theme park openings over the next several years.


Analysts point out that Disney is growing its theme park division rapidly while smartly spreading its risk through ventures with multiple partners.


The studio park Disney is building in Paris, for example, will require about $90 million of the company's cash. That will give Disney roughly a 40 percent stake in a development that will top $500 million.


It is only in California that Disney is spending primarily its own money, about $1.4 billion, to build California Adventure, the Downtown Disney shopping and entertainment area and the Grand Californian Hotel.


That's one reason Disney is speeding forward with yet another theme park in Anaheim, to leverage its infrastructure of three hotels, large shopping area, Disneyland and California Adventure. Disney officials said Friday that the first stage of the new development could open in three years.