Blackstone looking to sell Universal Orlando stake

March 15, 2011, 7:07 PM · Blackstone Group, the massive private equity firm that co-owns the Universal Orlando Resort, is looking to sell its stake.

Blackstone's a major player in the theme park business. In addition to its stake in Universal Orlando, it owns SeaWorld Parks & Entertainment and co-owns Merlin Entertainments, the owner of the Legoland theme parks. As such, it owns or co-owns every major non-Disney theme park in Central Florida.

Blackstone acquired its stake in Universal Orlando when it obtained the Rank Organisation, the original partner with MCA (the former owner of Universal Studios) in what was then just the Universal Studios Florida theme park and a bunch of surrounding land.

According to an SEC filing, Blackstone has offered to sell its share to fellow co-owner NBCUniversal, which would then own all of the resort.

NBCUniversal has until June 12 to agree to the deal. What if it doesn't? This is where things get interesting. In that case, Blackstone has the right to solicit bids for the entire resort, which could transfer its ownership - and NBCUniveral's - to another company, according to a "drag-along provision" in their agreement:

UCDP [Universal City Development Partners - the holding company that controls Universal Orlando - Ed.] was informed on March 9, 2011 that Blackstone triggered the right of first refusal and offered to sell its interest in UCDP to the NBCU Parties, who have until June 12, 2011 to accept Blackstone’s offer or be subject to the drag-along provisions in the partners’ agreement. We will cooperate to facilitate a sale pursuant to the terms of the partners’ agreement, including bearing the transaction costs of any such sale, but any decision regarding the timing and terms of a sale is outside of our control. Accordingly, although Blackstone has triggered the right of first refusal, we cannot make assurances that a sale of Blackstone’s or NBCU’s ownership interest in UCDP will occur or, if it does, the timing, terms or impact on UCDP of any such sale.

By the way, did you ever wonder what the ownership of Universal Orlando Resort looked like? Well, here it is, in convenient chart form. :^p

Universal Orlando ownership chart

The details of the SEC filing also reveal lots of information about what happens to branding agreements within the park, including the Universal name, should the resort be sold to a third party. (Basically, many go away eventually, and Warner Bros can pull the Harry Potter license upon a sale if it doesn't like the new owner.)

Finally, props to Universal for name-checking Theme Park Insider in the filing. That's gotta be a first.

Have at it in the comments, folks.

Replies (19)

March 15, 2011 at 7:28 PM · Wow... they love Theme Park Insider. How cool is that!?!

As for the eventual sale, if NBC does not pick up the ownership from Blackstone, does that mean someone like, uh, let's say, Disney, could sweep in and turn the world on its head once again?

March 15, 2011 at 7:47 PM · I think this is an aggressive business move by Blackstone. NBCUniversal has a new majority owner (Comcast). UOR is more valuable that it's ever been, thanks to Harry Potter. Blackstone's got the SeaWorld and Busch Gardens parks now, with Legoland coming online soon.

Why not sell its 50% in Universal Orlando at the top of the market to a new Universal owner, generating some cash that (one hopes) could be used to upgrade the SeaWorld parks? (Okay, I'm an optimist...)

If I were Universal, I'd certainly want to control all of my biggest domestic theme park asset. Harry Potter's going to be bringing cash for some time. Why share that with someone else? If NBCU can come up with the cash to make this deal, I think it has to.

No way I see this coming to the point where third parties get involved. Blackstone wants some cash, and it's going to get it.

March 15, 2011 at 7:50 PM · Yep, and it's probably for the best. Without the competition offered by Universal, I can't even begin to imagine how lackadaisical Disney would become.
March 15, 2011 at 8:07 PM · Think about this. Sea world p&e announced it would be restructuring debt. What better way to restructure than to get cash on hand. Its a move universal has to make otherwise it risks losing all right and licensing. You think WB won't use that as a reason to ask for more money for Potter? Its also a smart move for Comcast who has openly said they would like to dump the parks. With the entire control of the Parks it would make it easier to sell.
March 16, 2011 at 1:54 AM · hope this doesn't mean the end of the orlando flexticket if they will be no longer connected to seaworld
March 16, 2011 at 2:35 AM · Business Week adds another wrinkle: (Moody’s Investors Service said today in a report): "Director Steven Spielberg has a consulting agreement that entitles him to a portion of the parks’ revenue ... Spielberg may have the right to sell the consulting agreement to a third-party buyer, Moody’s said. Starting in June 2017, Spielberg has the right to terminate the consulting agreement and receive a one-time payment for its value or an ownership interest in the parks, Moody’s said."
March 16, 2011 at 2:41 AM · And by the way, can we take up a TPI collection to buy Blackstone's share of UO? I got a saw-buck that I'll toss into the hat.
March 16, 2011 at 6:08 AM · Count me in for $20..
March 16, 2011 at 6:20 AM · Okay with Brian and me that's $40. Minus Spielberg's 10% and J.K. Rowling's 15% (off the gross) that's a net of $30 for Blackstone.

We are rolling now!

March 16, 2011 at 8:07 AM · I can't figure out why they need Spielberg's involvement. There aren't a lot of his attractions in the park.

Unless Blackstone sells its share back to Universal, this property isn't worth as much to the new owners. It will slowly atrophy.

I can't see why Disney would buy it. They would only buy it to close it, but it will be at a high cost.

March 16, 2011 at 8:23 AM · As has already been quoted : competition is key. Without it Disney might not have the incentive to move forward as quickly as it should.
Whilst being complicated part-ownerships, intellectual rights and subsidiary ownerships can stimulate in a positive way. But when major stakeholders decide to sell-on the you-know-what can sometimes hit the fan.
All I hope is that a serious buyer is found , that the Universal brand isn't compromised too much and that it continues to provide genuine competition to Disney for many years to come.
The alternative might just create a stagnant pool in the theme park industry.
March 16, 2011 at 9:43 AM · Does anyone really think Universal "competes" with Disney? I mean in that classic "McDonald's vs. Burger King" consumer choice context?
March 16, 2011 at 9:51 AM · If it gets to the third party sale of course Disney will be intrested. Then Disney will get to look at the books. It nice when you know what your competition is doing.
March 16, 2011 at 10:11 AM · I may be wrong, but GE and Comcast are publicly traded companies, which means all Disney would need to do would be to buy a single share of stock which would give them the means to "get a look at the books."

One would think that Disney knows the parks business well enough to make a fairly educated guess about what Universal's financial standing is ... assuming they even care that much.

March 16, 2011 at 10:11 AM · Disney would most likely run into anti trust problems if they would buy the park. They would also have a hard time to make sure negative expiriences with Universal parks dont spillover to the Disney brand. Universal isnt quite like Disney, the staff isnt as smilie face as Disneys (which i pesonally like, but many Disney fans wont), older attractions are not as well maintained (which i personally hate). Bad maintenance is typical for short term cash flow obsessed PE, things can only get better once Blackstone is out.
March 16, 2011 at 12:54 PM · Blackstone's investment in Universal Orlando is nearly 11 years old -- very long for P/E investments. So they are exiting to pay back investors. Has nothing to do with Sea World since that was bought by later funds (P/E firms are always raising new funds when they can that have relatively short lives).

Speilberg's deal with Universal was done when the first park was new and they thought they needed him to compete with Disney. He has an incredibly rich deal and is laughing all the way to the bank no matter what.

Disney already sees the books through the Marvel license. And you need a lot more than one share to see the books. No way Disney gets involved here -- they have enough exposure to Orlando.

NBC people have long run the parks with Blackstone largely in the background. They've made a bucket of money on the investment (they took a big dividend in 2004) and took a chance by agreeing to do Harry Potter (and adding back money to do so).

And Comcast has only spoken positively about the parks. Expect NBCU to take over or no deal to happen. No third party is coming in without NBCU/Speilberg/WB's approval.

March 16, 2011 at 2:01 PM · Anonymous: Disney already sees the books through the Marvel license. And you need a lot more than one share to see the books.

I respond: Yeah but (as I posted) with Disney's knowledge of theme park operations and the information in quarterly numbers the Mouse wouldn't need that much more than one share. Plus that gets Mickey a free annual report.

I wonder if Disney owns any shares of Comcast?

March 16, 2011 at 3:06 PM · If that were true, every company would own one share of everyone else! Unless you own a majority of the company and are running it, you can read the 10-K on the SEC web site like everyone else. It just doesn't work that way. Disney can find out more about Universal at a locals bar than they could be owning one share of stock.
March 17, 2011 at 3:42 AM · Again "yeah."

Is that supposed to be "locals" or "local's" or "locals'?"

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