Comcast’s theme parks are an underrated attraction

Epic fail. Brian Roberts keeps expanding his own magic kingdom, but it’s mostly an illusion to shareholders. Comcast’s boss is getting closer to opening the doors at the company’s newest theme park, ratcheting up a rivalry with Walt Disney. The cable and entertainment giant’s valuation, however, suggests investors are wary of getting on the ride.

Epic Universe, due to open next year, will be Orlando’s first large entertainment complex in more than two decades. Comcast is spending an estimated $6 billion on new immersive experiences starring Harry Potter, Nintendo’s Super Mario and the How to Train Your Dragon franchise that came with NBC Universal’s acquisition of DreamWorks Animation in 2016.

Roberts’ ambition traces back to his unsuccessful hostile takeover attempt of Disney 20 years ago. Instead, Comcast took control of NBC Universal and its vast operations. The idea was to make the most of housing under one roof the pipes that distribute cable TV and internet with the entertainment flowing through them. At the time, competitors including Time Warner were doing the opposite by dismantling their empires.

It has been hard to persuade shareholders of the combination’s benefits, based on what Comcast’s various parts appear to be worth. Its cable, broadband and wireless division is expected to generate $34 billion of EBITDA next year, according to estimates gathered by LSEG. On the same multiple at which Charter Communications trades, a little more than 6 times, Comcast’s comparable assets would be worth about $210 billion.

Conducting a similar exercise for NBC’s TV and streaming units using Fox as a comparison yields another $20 billion. The studio behind Oscar-winner “Oppenheimer” would be worth about $14 billion if valued similarly to Lionsgate Studio in its pending deal to go public via a shell-company acquisition. Finally, theme parks are expected to rake in $3.9 billion of EBITDA next year. Put on a slight premium to what Six Flags Entertainment fetches, they’re worth about $40 billion. After backing out corporate costs, Comcast’s sprawl adds up to nearly $280 billion.

This theoretical sum represents a roughly $40 billion, or 17%, premium to where investors value the Comcast enterprise, in one sense imputing no value to the theme parks. Looked at another way, trading on the same multiple as Charter suggests Roberts gets little to no credit for the non-cable-and-broadband assets. The media business, which accounted for one-third of last year’s revenue and less than a fifth of EBITDA, tends to be valued more highly elsewhere. In financial terms, Comcast’s universe is hardly epic.