Comcast Q3: Universal Parks Down 4.4%, Soft Until Mid-2027

0:00 Okay, from our studios in Los Angeles and Tampa, this is Green Tagged Theme Park in 30. I'm Philip from Gantam Lighting and Controls, and I'm joined, as always, by my delightful co-host, Mr. Scott Swenson of Scott Swenson Creative Development. Here on Green Tagged, we look at the top news each week, and we try and pick the stories we think matter most to industry professionals. And this week, we're taking a little break from Six Flags while we let those stories develop and ruminate. And we're looking at the latest earnings from Comcast. And then we'll see if we have time for some interesting research that came across, uh, my desk earlier this week. So, um, for Comcast, so we're recording this a little bit early. So if something has happened since then, that's why I'm recording this right after the earnings call. So it was this morning. I listened to the earnings call and it was, uh, not great. It's, uh, I think if we're going to kind of grade this, it's, uh, There was a lot of hand wavy and kind of like distraction, look over here type of situation going on in the earnings call. But basically, there are two things happening.

1:12 They are losing more broadband subscriptions than the analysts predicted. So people are kind of uneasy about that. And then the theme park division is doing poorly. So both not good. So it seemed like they kind of tried to not discuss theme parks at all, kind of like as little as possible discuss the parks section, and they more focused on the broadband narrative. And their narrative here is that they are moving from the broadband over to the wireless. And so yes, broadband is weakening, but they've known that forever, and they're making great progress in getting the wireless people signed up, and they're talking all about their promotional plan to start people on free lines and move them over to paid, and having a great conversion rate to getting them on paid plans and stepping up and replacing that revenue.

1:58 That's what's going on. The reactions to this were mixed because of that. I think Comcast's narrative, they want you to believe that they could be a growth company. Remember, they're splitting up into these two separate companies. Their narrative is, that once things are split up, it's going to allow them to be faster and more able to adjust. And that will mean that they'll be more competitive and almost like the wireless company is going to be a growth company again because of their new opportunities or something. So that's. Kind of what they want us to believe. But there were not very many bright spots for the parks. So parks revenue was down 4.4%. Adjusted EBITDA was down 17%.

2:49 And the, the big, I guess there are, there were a few clouds in, in here, even more clouds, all cloudy, but, uh, Kavanaugh talked about how the competitors were quicker to anticipate and recognize the softness in demand. So we talked about this before, where we talked about the parks bringing up softness happening in the Orlando market and in Asia and. what he mentioned on the call was basically that the other competitors, i.e. Disney, like unofficially Disney, were kind of able to more quickly bring in offers and bring in local, we've talked about all the local things they're doing, that kind of stuff, to bring in people. So they admitted they were slow to get that done. And beyond that, Japan is still suffering due to geopolitical issues, right? China is actively discouraging Japanese travel. So That is a problem there.

3:44 And then they talked about how the capacity at Epic Universe is not where they need it to be still. And so they're trying to resolve that. Gosh, since when? Yes. That was so funny because it's like, okay, that's, yeah, we've been talking about that since it opened. So it's like, I think, I don't know, the other highlights, because of all this and all the kind of economic uncertainty, They're expecting Q4 to also be soft and also Q1 and up to Q2. So they're not really anticipating this kind of tourism to turn around until maybe summer of next year, which that probably is a whole separate story on its own.

4:30 It's like the industry ramifications of this slowdown for at least six months or more. And they're hoping that bringing Fast and Furious to Orlando will kind of resolve that. Of course, that's not going to Epic. So it's kind of like they're... Now they're kind of trying to say that, you know, we're going to bring this Fast and Furious thing to Orlando and hopefully that'll relieve some of the softness. I don't know. There's a lot. I mean, there's more still we can go through about Peacock and all that. But Scott, let's get initial reactions. What do you think to the macro problems and what's going on with the park softness? What do you think?

5:11 Well, again, I'm going to sound so sarcastic here and so over it. This is a template for pretty much any earnings call within the industry. Somebody else did something, or they didn't mention the weather. God love them for not mentioning the weather. That is true. That's true. That's true. They did not mention the weather at all. Oh my gosh, they deserve a gold star just for that. Gold star for that. Um, but they also, you know, it's, it's interesting because they also, uh, it's, it's, for those of you who have been in the industry for a while, and I'm talking to you old people like me, um, we have heard this exact same kind of rhetoric anytime that it's down, you know, we expect that the addition of insert new attraction here will change our, our trajectory for the future.

6:08 Okay. Um, We now are going to mention something really obvious that everybody's been saying, and now we're going to put it in an official document. Epic has throughput problems. So, again, I know that this is... I'm being far too glib about this. I do understand that. I am totally honest when I say that. However... This is the approach that every major attractions company has taken whenever they haven't had a stellar year. And even if they have had a good year but had a couple things that didn't perform the way they anticipated, these are the classic go-tos. I think that, you know, it kind of goes back to, and what nobody wants to say, except we've said it a couple times on this show, is... is the massive theme park what people still want to go to? And I still don't necessarily know what that answer is, but, um, I think it's interesting when, when attendance is down, spending is down, but they're concerned about throughput. They're concerned about throughput and they're not meeting their numbers. They might've got to be really concerned about throughput. So to me, that's a big nothing burger. That's a, that is a let's fly this so that people will come and see that we're, we're listening to them. We're paying attention to their concerns. Um, Yeah, I'm very cynical about this particular report, and I admit that wholeheartedly. It's one of those situations where, you know,

7:42 the Fast and Furious thing. Like, Fast and Furious coming to Orlando is going to turn around the park's performance. Yeah, I know. Highly unlikely. Right, yeah. Highly unlikely. Now, maybe I'm wrong. I've been wrong before. But. It's, it's no, no. Yeah. Cause I think it, to your point, it doesn't resolve the overall macro issues and the whole, you know, it's like that, that's not really, that's not incentivizing all the locals to turn out. And that's not kind of coming up with a plan for how you're going to replace your international visitation. That's cause that's really what's going on, right? You do international visitation is plummeting. Canadian travel is plummeting.

8:24 All this stuff is plummeting. And it's, people are also, we talked, we, how many times we've talked about the, the plane capacity has been reduced. They're specifically reducing the cheapest tickets, right? They're, they're trying to move everybody up to premium. The airlines are, you know, and so you have less flight capacity and energy is more expensive. So that's less people driving and less people flying. And so you have all these factors happening. What are they doing to address that? And it's like, not really to your point, like a new roller coaster is not going to fix all of that. And, Yes, he did acknowledge that they kind of slept on the wheel. He acknowledged that they weren't basically quick enough to adjust their product mix and all that.

9:06 But he said they hired a new marketing person. Yeah, but that doesn't immediately lead to here's what we're going to do. And if he recognized it just before he went on this call or just before they hired the new marketing person, then he's really behind. The trend. I mean, when I read this, If I'm going to read through all of the, just for the theme park section, if I'm going to read through all of the CYA speak, basically what they're saying and not addressing is fewer people are going to parks. Yeah. We used to call it our attendance is down, but they come up with all kinds of other wonderfully confusing and ways to make them not look like they dropped the ball. Um, yes, he did admit they weren't quickly enough They didn't evolve quickly enough, but I think we have to be realistic and recognize, you know, you brought up a lot of the factors, Philip, you, uh, lower international tourism, uh, energy is more expensive. Travel is more expensive. The airlines are changing to make it so that travel is even more expensive. Um, so that, you know, they're trying to convert everybody to higher, higher ticketing. so therefore guess what? All those things lead to lower attendance at the parks.

10:28 Yep. So that's, that's unfortunate, obviously, but I think that we've got to start thinking about who is going to parks, who is spending money at parks and try to offer experiences and, um, I'll even go so far as to say deals that will help with the financial challenges. You know, we talked about, um, we talked years ago, we talked about why don't they just buy a ticket, get a gas card, you know, when we were so concerned about, uh, about energy costs. But, um, one of the things, one of the things, and this is a higher end provider, but one of the things that has worked incredibly well for Viking cruise lines is they will offer, um, free airfare, uh, from major cities to the port if they buy a cruise.

11:25 And what they've done is they've basically worked with the airlines so that they buy blocks of seats at a greatly reduced rate, and that becomes their marketing. And it's their return travel marketing. So And the only reason I say that it's working, because I have done work for Viking, but I don't work for them internally, and I don't have any insider information. But the reason I say it works is because they still do it. And they've been doing it for several years. So it's one of those, it's not just, how can we make the parks more attractive? Think outside the park. The guest does not, their brains do not only happen when they're in your parks. So you can add all the cool things you want, but...

12:08 if people can't get there or can't afford to get there and you're not doing anything to help them with that, you're going to have a lot of new stuff that's sitting underutilized. I won't say empty. That's, that's unfair, but underutilized. Yep. Yeah. Yeah. It was, it was interesting because they, well, this is always how earnings calls are, but they basically didn't almost avoided talking about the parks. Uh, I think, in the entire hour of the earnings call, you may be like a minute was for the parks, you know, maybe one, maybe one or two minutes. Uh, they really shied away from it. And even when they were asked some pointed questions about kind of the, the softness and their kind of plans. I mean, I would argue they didn't really answer the questions when asked. So, I mean, maybe other people have a different take, but I, I was like, did they answer the question?

13:01 I don't think they did. They just kind of like, okay, we're done and got off the call. But, uh, Yeah, they didn't really talk about the parks at all. So their main narrative was kind of just about the wireless and then also about their streaming. And if you look in the financials, what was interesting is that Peacock had nearly caught the parks in this quarter, right? So the media was $ 769 million versus theme parks at $ 780. So in the EBITDA, it was pretty close. They're getting up there. And they also have a new deal with YouTube. So it actually is very interesting to If I'm going to give them credit for anything on the entire call, the one element I thought was interesting was they seem to be taking an approach that's similar to Apple versus Android, where it's like the Disney and those people are the Apple, where it's a closed ecosystem. And they're kind of pitching this idea of being an open ecosystem. And they kind of talked about how attention has fragmented and all these things are fragmenting. So their approach is, why keep the Peacock stuff kind of locked into Peacock. So they have a deal with YouTube and they're going to be trying to do a deal with shorts and with content to get out into those, to basically market more of their assets and drive more demand for the IP.

14:16 I think that is smart. I think it's like, yeah. You know, and maybe they are more aware of the challenges that the parks have than I'm giving them credit for. And that's why they chose not to talk about them as much. I mean, it's one of those, the quick turnaround, if there's going to be a quick turnaround, because let's face it, who is the audience for these calls? It's not theme park fans. The audience for these calls are investors, and the investors want to know, when am I going to earn more profit? Period. That's it. They don't care about the quality of the parks. What they care about is, when am I going to earn more profit? So, Of course you're going to spend the vast majority of your time talking about what can potentially be the quickest turnaround. What can potentially be, you know, streaming, their streaming platforms have the most room for growth. And they're also the easiest to show a plan on paper.

15:18 Does that make sense? I mean, with parks, you have to recognize, you have to rely significantly more on guest behavior and guest interest. And that, as we've seen ebbs and flows pretty regularly, um, in this industry. And, you know, sometimes it's targeting this group. Sometimes it's targeting, sometimes it's targeting local, sometimes it's targeting international guests. Sometimes it's targeting different age demographics. So that is, is difficult, more difficult to predict than we've signed a. Deal with YouTube. Look, don't panic. Here's where your money's going to come from. Yeah, that's true. That's valid.

15:58 It makes total sense that the vast majority was on the thing that they can fix or appear to fix the quickest. Right. Right. Yeah. And of course, as usual, you never want to talk about the negative things, right? So of course, they're not talked. Because there's not, like you're saying, a lot of the macroeconomic stuff is seemingly out of their control. but not really, as we just discussed. It's seemingly out of their control in that they can't control gas prices, but it's not out of their control in that they could come up with better ways to incentivize people into or to compromise on that, and they're just not. We talked about even getting rid of parking fees or just doing other things that kind of help alleviate some of this to get people in the parks, and.

16:39 They're just not. Yeah, you can't change what's going to happen in the world. You can change how you respond to it, and that's where the very successful business people... excel, is their ability to take what has happened that is out of their control and work with it to make it a plus as opposed to a minus. The last thing to touch on that came up in the call is, again, I think deliberately vague, but they talked about a big effort in coming in Q4, it's going to cost about a billion dollars. So they were kind of like, I guess, preparing everybody for this that's going to happen at the end of the year. And he called it, Kavanaugh called it the most significant operating and cost transformation in our company's history with an opportunity we believe will ultimately amount to billions of dollars over time.

17:41 I didn't... Maybe other people are more clear on what he's actually proposing, but I didn't really understand what he was. I didn't really understand what this particular plan was, but Armstrong said, we've already made important leadership changes across customer service growth and marketing, and we're simplifying our organizational structure to move faster. And they talked about AI. To me, it all sounds like they just are planning on using AI to lay off a bunch of people. That's kind of what it sounds like to me. They're getting ready to split the companies up, so they're kind of pre-dividing departments as needed and kind of reorganizing people. And it sounds like they are going to use kind of optimized AI for customer service and guest journey and guest experience.

18:35 And blah, blah, blah, blah, which is all Latin for layoffs, right? And there's some reporting also from other larger organizations reporting, uh, the rap, um, and Bloomberg reported that most of this, that, that they had, they've heard, heard reports of. Lots of layoffs and that, you know, that's happening. So that's what it seems like to me is it's, it's, they're labeling it as, as a massive reorg and a massive, uh, way to improve efficiency and blah, blah, blah. But I mean, it's, it's probably going to, that all sounds like layoffs to me, uh, coming at the end. And it sounds like it's probably going to be more from the broadband and wireless area.

19:15 because they did mention AI, but it seems like AI in the context of helping people to service accounts and helping for deals and helping for customer service. And blah, blah, blah. I hope it's not more AI-generated t-shirts in theme parks. I hope it's not that. I hope it's just them bringing in AI agents to help you with manage your wireless and broadband accounts and give you offers. I'm hoping it's that and not stuff on the theme park side, but but it, it was very vague, but it's going to cost a billion dollars apparently. Well, and what I find most interesting is by the time stuff like this becomes public in companies of this size, it's already underway. It's already being put into action. So I, I think, you know, it's funny that you mentioned the AI t-shirts that may have been one of the earlier phases of it and it all of a sudden went oh that went south let's fix that um but but but just the statement i just have i'm sorry i just have to focus on this because again i guess i'm just in a cynical mood today but um the most significant operating and cost transformation in our company's history with an opportunity we believe will ultimately amount to billions of dollars over time That is the biggest pile of word salad I have ever heard in my life. Maybe not in my life. I've lived through some very strange times.

20:45 But that has nothing that is measurable, nothing that is quantifiable in any way, shape, or form. There is no timeline. There is no target of how many. You know, billions of dollars it's going to save. It's going to save billions of dollars over time. So that could be, it's going to save us $ 1 a year for a billion years. I mean, there's, there's no, there's no way to prove or disprove that particular statement. Yep. It's the opposite of a smart goal, right? Well, yeah. I mean, you know, if, if you're going to come out, I'm, and again, maybe I'm just, maybe I'm just too old school, but it, My feeling is if you're going to come out with a goal, it must be measurable.

21:40 Right. You've got to know when you've accomplished said goal. You've got to know whether you are making progress towards or losing ground away from said goal. So if it's not measurable, you know, that. Unfortunately, phrases like this have become far too common, specifically in the United States. But it's just one of those situations where they will say, we are going to do this, and it's all going to be beautiful. And they don't talk about how, they don't talk about when, they don't talk about what does it mean, what is our North Star? There's a phrase I haven't used in a while. What is our North Star? And once you reach it, then how do we maintain or build upon that? How do we use that as our next stepping stone? But this is one of the most vague statements... that I've heard in a long time. And usually when statements are this vague, it mean it could mean one of several things. It could mean that they have something in play, but they can't talk about it yet because it will undermine its effectiveness.

22:39 Very possible, very possible. It could also mean they have not a clue as to what they're going to do. Um, but whatever it is, is going to be good. Um, or it, it could also mean that they do have a plan. It is being implemented as it stands now. But because there are no measurables, they don't know how successful it's going to be or how quick it's going to turn around. Right. Right. Yeah. Pay attention. I mean, here's the takeaway for me for this whole article. Pay attention to really what is being said. And if there are no measurables, there is no plan.

23:24 Right. Right. Yeah. Specific, measurable, achievable, relevant, and time. So smart. Smart goals. We always make things that are smart. But I think it's also possible, though, that they... I. Mean, I don't know what else it could be besides layoffs. That literally almost is. Like the definition of a layoff. I think you're absolutely right. But they're not going to come out and say, and our plan to save money is to lay off X number of workers and... Because what will end up happening is the moment they say that, X number of workers don't wait to be laid off. They fly. They go somewhere else. They get offered other jobs.

24:04 Other companies recognize, oh, we're going to get top-quality people here, and we're going to be able to pay them less than we would have had to pay them to take them away from Comcast. So, yeah, they can't lead with layoffs. Right. I think that's probably what it is that they– Well, two things. One other, you know, other companies have just said layoffs. I think it tends to work better for them. Right. I mean, even Disney went previously with a cost cutting, right. They just say we're laying off people. So other people have said it like that, which leads me to believe that it is more what you're saying. Like, even if it is layoffs, they like, maybe they don't even know how many or who or where. And like, it's such a, it's too vague even to label like that. But the other thing too, to your point is, you know, the people that can leave and the people that do preemptively leave are the ones you don't want to leave, right?

25:01 Because those are the people that are skilled enough to have other options easily. It's the people that stay that you're going to want to get rid of because they don't have other options. And so then you're kind of, it's actually like the worst of the worst. If you kind of preempt it and too many people run away fast, those are the people you actually wanted to keep. And then you're going to end up with people you didn't really want to keep. And then you have to fire them. And then you also don't have your talent. So you kind of left in a bad spot. So it could also be that. Yes. And we've seen this kind of quote unquote restructuring fail over and over again. Because as you say, you lose the best, you keep the worst. And you also lose just a ton of institutional knowledge.

25:48 Right. So you go back and start making the same mistakes that you made five years ago, 10 years ago, 15 years ago. Right. So yeah, it's, it's interesting. I hope, and I'll tell you what, I know that's going to be a lot of people who are going to comment and say, you know, Scott, you don't know what you're talking about. And that's fine. Um, because I, this is all conjecture based on, based on my personal, personal experience with various companies, um, within the attractions industry. But to you, I'm going to say right now, I hope I'm wrong. I hope I'm wrong. I hope that all of this stuff is all of the positive things that we all want to believe it is, that it is a plan that they have that is going to support and make certain that not only the streaming side is is, is successful for the rest of the company's existence, but also the parks. Cause again, that's what this shows about, um, that the parks continue to have profit and success so that they can be around and we can all continue to enjoy what we enjoy doing. Um, I hope I'm wrong, but based on my experience and based on what I've seen happen in the past, I'm concerned.

27:03 Yeah. I think that's kind of what I meant. earlier is I'm. This, this continued softness, I think is the, it's a larger story. I think for us in the industry of, of, you know, universal being one of the two major players that there was a funny moment where one of the people on the call said they were the second best theme park company and then kind of immediately retracted it and said, we're one of the two top people. Right. But it was kind of funny that they kind of, admitted in a word flub on their own that they're the second best. Because they've been saying this whole time that they're tied with Disney, which is not.

27:44 But that's not always been the case either. I mean, again, we live in a world where we kind of forget history, and we are encouraged to forget history. There was a time when Universal opened Islands of Adventure here in Florida... where their whole push was, let's catch Disney. That was their internal employee push. Let's, you know, let's get to the big boys. Let's beat Disney. Let's catch Disney. And for a couple of years, shortly after the opening of Wizarding World of Harry Potter, they did. They really challenged the Disney model. But to not, you know, I.

28:27 It... Do you think we, our memories are that short or have you lost so much institutional knowledge that you don't remember it either? I don't know. Yeah. I think to your point, a lot of it is that the people on these calls are, you know, investment bankers or people who are not really, don't really know anything about the theme parks. They, and they don't really care. You know, they're just, they're just like, what are the numbers and what's, what's, what are you going to do to, I mean, ultimately, you know, that's the, I always try and remind people like Comcast is a broadband company. And so I think ultimately the investors really actually do care more about the broadband numbers and the wireless transition and how that's going to succeed or not. They don't really care about the parks and all that's actually good.

29:08 Like I argued previously, I think it's actually better to split the companies because then they're not going to be penalized by each other's issues. So then, but if, if they split, they're gonna be splitting next year. Right. And then. The softness is still a problem, then it'll be an even bigger problem, right? For that new, the new half of that company, because it's going to be all in that the whole company will be there's the theme parks. And if there's continued softness, that could be a thing. So not having a plan for that is the bigger problem. it's like when these companies split up just we talked about horror unleashed also in vegas and the low numbers of that and how they're supposedly still planning chicago and all this but i've said for a long time they would do that probably would be different if people saw that as an individual line item And they saw this is how much it's costing every month. And this is how many people we get in every day. And this is the problem. And they don't have that level of scrutiny because it's buried in this much larger company. When it's all about the theme parks only, I think, yeah, you might need a better plan.

30:15 But anyway. Well, and I think that's where efficiency is going to become more to the surface. Because A, you'll have the people involved in that part of the company who have experience. I mean, assuming. Who have experience in that part of their industry, and they will have more clout because they don't have to report to a giant food chain that goes all the way up that knows nothing about how theme parks work. So anyway, that's it. We talked a lot about this earnings call, and I think it, in my opinion, opened up quite a bit of discussion. Hopefully you will continue it, whether it is in the comments section for this video or this podcast or amongst your peers, please continue to discuss it because, you know, and not necessarily how it impacts Comcast, but how it may be rearing its head in your parks or your attractions as well, because that's really the purpose of the show. On behalf of Philip Hernandez with Gantam Lighting and Control and myself, Scott Swenson with Scott Swenson Creative Development, this has once again been Green Tag Theme Park in 30, and we will see each and every one of you next week.