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NBCUniversal chief Jeff Shell, the CEO of the cable giant’s entertainment arm, says the theme parks business is “coming back a lot faster than we had expected.”
Orlando, NBCU’s largest theme park, reopened more than a year ago and has seen more than 11 million visitors since then as of last month, Shell said. Despite virtually no international attendance, which historically accounts for 20-25 percent-plus of attendees, the park has hit its capacity and come in at or above 2019 levels. He added that per-visitor spending is usually lower domestically but the firm is not seeing that now, with parkgoers “buying Harry Potter wands and all sorts of things,” the NBCU CEO said. “This summer is looking pretty strong” because of pent-up demand and the fact that the firm kept building attractions, like a new rollercoaster based on Jurassic World, Shell said.
The firm’s Hollywood park reopened recently at 25 percent capacity, but Tuesday’s reopening in California will allow it to operate at full capacity. “I’m very optimistic,” he said. In comparison, Japan theme parks trends have been “a little bit more bumpy.”
Speaking at Credit Suisse’s virtual 23rd Annual Communications Conference, Shell also said the firm had basically wrapped up its advertising upfront dealmaking, calling it “the strongest upfront, I think, probably in the history of NBCUniversal.”
“We saw results in this upfront far beyond what we thought we’d see,” he added, but didn’t detail specific figures.
How much do companies need to spend on content in the streaming age? “The answer to the question is: a lot,” Shell said, adding “pretty significant investment” is important to “compete.” But he highlighted: “We already invest … close to $20 billion across our company,” including sports and news.
“We have always had the capital and the scale to do what we need,” he said, mentioning the launch of streaming service Peacock as an example. “So I don’t think we need more scale,” especially for scale’s sake, he concluded.
Asked about the film studio’s position overall, Shell said, “I honestly think that our creative position in our movie business is as good as it has ever been” since he has been at the company. Beyond current release F9 and the next Jurassic World, he also lauded Illumination and DreamWorks Animation as strong brands.
The movie business “was constrained” economically and beyond due to traditional windows, Shell argued. “We are early days on PVOD,” with signs being that it is “not too cannibalistic,” but being “an added revenue stream” for the studio and its partners. Theatrical remains an important part of the film business though, he emphasized. And he said that the studio decided to launch The Boss Baby: Family Business on Peacock and in theaters at the same time because it saw a lack of content for the target audience and wanted to be “opportunistic” to serve people interested in it.
Addressing the growth of streaming, Shell said: “The linear market is going to decline regardless of what we do.” But many are “too quick to write off linear,” which is “still the vast majority of the viewership,” and will remain so for a long time, particularly for sports and news. So maximizing content across both linear and streaming is key, like in the case of the NFL, he said. Meanwhile, in TV, the company is “being rewarded with a pretty strong recovery in the ad market.”
Plus, NBCU, in the “probably most important” focus, made sure to continue its content development in film, news and sports amid the pandemic. Since that is “the fuel of our business,” Shell said he feels well positioned. “I couldn’t be more optimistic,” he summarized.
Comcast is happy with its collection of businesses, including NBCUniversal and European pay TV arm Sky, at a time when much talk is focused on whether entertainment companies will need to look for more scale via deals, Comcast CFO Michael Cavanagh had told a recent conference. “We like our portfolio,” he said during a J.P. Morgan event, adding that the company has always looked at possible deals, but with a focus on whether they make strategic and financial sense. “We like the hand we have without M&A.”
Shell also discussed the early performance of NBCU streaming service Peacock, which, according to Comcast’s first-quarter earnings report in late April, had reached 42 million sign-ups, with a third of those being monthly active accounts. He said the streamer is sometimes “misunderstood,” explaining that for NBCU “it is the back-end” designed to “complement our existing businesses.”
Cavanagh recently said that “by no means is streaming easy for anybody” in the industry, but Comcast is looking to “play to our strengths,” including the pay TV ecosystem, its content library and advertising relationships.
The Discovery-Warner mega-merger led Wall Street to debate whether other deals would follow. Wells Fargo analyst Steven Cahall was among those asking whether the likes of Comcast and ViacomCBS may be “suddenly feeling lonely.” Like some of his peers, he had suggested on March 17 a merger of WarnerMedia with Comcast’s NBCUniversal-plus-Sky, noting, “investor preferences for more-focused business models, and the industrial logic that arises from combining two big content libraries to better compete with Netflix and Disney.” But most on Wall Street have argued that Comcast/NBCUniversal was unlikely to launch a counter-bid for WarnerMedia.
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