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Disney Universal

Believe it or not, back in 2002 Disney was rumored to be interested in buying arch-rival Universal. What if it had really happened?

On August 9, 2002, the Reuters news service carried a quote from Disney's then-Chief Financial Officer Thomas Staggs. Staggs was commenting on the likelihood of Disney acquiring Universal, which was then owned by parent company Vivendi. During a rapid phase of expansion, Vivendi had purchased Universal's previous parent, Seagram, for a staggering $34 billion in 2000. It had bitten off more than it could chew, and was now struggling under a mountain of debt. Universal was up for sale, in a bid to help raise much-needed cash.

The Orlando theme park market was very different back in 2002. These days, Universal Orlando is buoyant, flush with the success of the Wizarding World of Harry Potter. In those days, it was struggling to deal with catastrophically low attendance at Islands of Adventure, the shiny new theme park it had opened in 1999. On top of that, the September 11 terrorist attacks had struck a blow to the tourism industry, and Universal Studios Florida was suffering a major dip in attendance, too. Its ambitious plans to open two more theme parks were on the verge of collapse (and collapse they did, also as a result of Vivendi's struggles).

"Any assets that are in our core business that come available, we would certainly take a look at," Staggs told Reuters, when asked about a potential acquisition of Universal. "Our primary focus is our core business. To the extent we can do an acquisition that is not dilutive to the earnings or cash flow, we'll take a look."

Analysts speculated that Universal would have to be available at a bargain price to justify such a deal. "Owning more theme parks could make Disney even more cyclical because that's a cyclical business," said Katherine Styponias of Prudential Securities.

In the end, Disney didn't pursue a takeover. At the time, Disney itself was under pressure, with its stock price at a 52-week-low. Walt Disney World was also suffering as a result of September 11 and an economic recession. Universal was sold at a bargain basement price, though, being acquired by General Electric for just $3.8 billion (Vivendi had originally sought around $14 billion).

It may not have happened, but it's fun to think about what could have been if Disney and Universal had combined forces. What would it have meant for the two companies' theme parks?

5. Marvel characters at Walt Disney World?

Spider-Man

Ironically, the Orlando Sentinel's story about the Disney-Universal rumors began with the line: "Mickey Mouse and Spider-Man roaming the same theme parks? The idea might not be too far-fetched." And indeed it may not be, given that Disney now owns Marvel, Spider-Man's creator. The company is free to use Spider-Man at all of its theme parks bar those at Walt Disney World, with Universal Orlando having exclusive rights to use the character in attractions within a 250-mile radius as a result of its pre-existing deal with Marvel.

If Disney owned Universal Orlando, though, those problems would be a thing of the past (although it may have had to buy out Blackstone, which owned the 50 percent of Universal Orlando that Vivendi did not hold). Disney's Hollywood Studios, perhaps, would have been the most likely venue for new attractions based on Marvel properties such as Iron Man and The Avengers.

4. No Wizarding World of Harry Potter?

Wizarding World of Harry Potter

Before Universal inked a deal with Time Warner and J.K. Rowling to license Harry Potter for use in its theme parks, Disney had been courting Rowling itself. In the end, the company decided that Rowling wanted too much control over the project, and walked.

With Universal out of the game, would Rowling have opted not to license her characters to Disney, the only remaining theme park firm with the financial and creative resources to them justice? Or would the two sides have eventually compromised, bringing Potter to Disneyland, Walt Disney World or - possibly - the Disney-owned Universal parks?

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Comments

I totally agree with points 1 2 & 4 and possibly three. Another possibility could have been that Disney would have closed the Universal parks to eliminate the competition as Cedar Fair did with Geauga Lake.

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