NBC Universal, the media company owned by Comcast , has agreed to buy Blackstone's 50 per cent stake in Universal Studios Florida in a $1-billion (U.S.) deal that consolidates its ownership of the theme park.
The purchase is significant because it shows Comcast's willingness to invest in one of NBC's biggest cash engines and comes as the company reviews the performance of every business in the NBC portfolio, which includes a movie studio, broadcast network and cable TV channels.
The Universal Studios transaction represents a hefty return on Blackstone's investment in the park. The private equity firm acquired its stake from Rank 11 years ago for $275-million cash.
The Universal park is in Orlando, a world centre of amusement parks, and while it is a cyclical business prone to swings in the economy and international travel, it has continued to enjoy success thanks to a popular Harry Potter attraction.
"The acquisition consolidates our ownership and confirms our long-term commitment to Universal Orlando and the theme park business," said Steve Burke, chief executive of NBC Universal. "Universal Orlando is a consistent and significant driver of operating and free cash flow and is performing extremely well."
NBC Universal said the deal had an enterprise value of $3.2-billion and would be paid for with cash on hand, borrowings under NBC Universal's existing revolving credit facility and a one-year $400-million note to the company from an affiliate of Comcast.
The deal gives NBC Universal full control over assets that include the main Universal Studios Florida theme park, Universal's Islands of Adventure and the CityWalk dining, retail and entertainment complex.
It comes five months after Comcast completed its drawn out purchase of NBC Universal, when it acquired 51 per cent of the media group by paying $5.8-billion to Vivendi and $7.1-billion to GE. Comcast also injected its own cable channels into the new joint venture, which is valued at $30-billion.
It represents a successful exit for Blackstone, which recently put on hold plans for an initial public offering of Merlin Entertainment, another theme park operator.
Merlin owns Legoland, Madame Tussauds, the London Eye, Heide Park, in Germany, the Dungeons and other attractions. It had aimed to complete a $2-billion IPO but pulled the flotation on concerns about the volatile financial climate.
However, Merlin recently said it remained committed to an IPO. CVC, another private equity firm, holds a 28 per cent stake in Merlin, the second largest theme park operator in the world by admissions after Walt Disney.