Disney vs. Comcast: Why Being Best-in-Class Matters
April 20, 2021
Walt Disney (NYSE: DIS) and Comcast (NASDAQ: CMCSA) compete in the theme park space. In Florida, Disney World has been locked into a spirited battle with Universal Studios. Both companies parks were hit hard by the pandemic and both are operating, in theory, with capacity limitations, mask requirements, and some social distancing practices.
7investing Lead Advisor Dan Kline visited Universal Studios for the first time since the pandemic began and to say he wasn’t impressed is putting it mildly. Kline recounted what bothered him, how Disney has handled the pandemic better, and why that should matter to investors on the April 19 edition of 7investing Now.
A full transcript follows the video.
Dan Kline: So here’s the deal. We’re going to start with Disney World versus Comcast Universal Studios. And this is why I invest in best in class companies and Disney is a best in class company. So let’s talk about the pandemic. During the pandemic I’ve been to Disney multiple times. When you walk into Disney there’s spacing everywhere, there’s social distance markers, if you so much as put your mask below your nose, a person with a sign comes over and warns you. If you don’t then replace it a hired goon comes over and makes it clear you’re supposed to. I’m teasing a little bit, but security is really, really good, lines are spaced, there’s Plexiglas on many of the rides so your distanced. There’s limited capacities in the stores. For going to a theme park in a somewhat dangerous situation, they’ve done the best job you possibly can.
I expected the same for Universal Studios. We haven’t been back to Universal Studios. Two things I really noticed. First of all, they are wildly understaffed, and why is this important? Because you want to see a company operate under pressure. When I’m investing in a company. I want to see how it does when things are not going well, and I get there, my pass didn’t work. Turns out my credit card that it was on had expired a couple of weeks before,
I had to wait over an hour in line, there were three available windows. And as you might imagine, quite a lot of people that had similar problems to me because they hadn’t been back. So that was a red flag. Then I walk into the park. And while they’re making announcements about masks and social distancing, none of it was taking place. They are saying they have a 35% capacity.
I’m just going to go on the record and say, I think they’re lying. I’ve been there at times when it was busy. And I understand some of the high volume shows and and other things that take crowds away weren’t operating. But it was very, very crowded, not quite Christmas crowded, but 90 minute waits for rides and they’re not doing distancing on rides. They’re not running at limited capacity. It was very disappointing.
Now, I am not a Comcast investor, because Comcast on the cable side is pretty terrible. But I’ve always said if they spun off the theme parks and NBC, I’d be really interested in that because they do have a premium theme park experience. But with with that being said, it was not a fun experience. It did not feel like a safe experience. My son did one ride. We waited in line 45 minutes to get a slice of pizza. This stand, not a complicated menu Steve, they had pizza, churros, and soda. Now admittedly, some of the problem was the human beings who would get up to the front of the line and not have made a selection after 25-30 minutes when really there’s not that much choice.
It’s not that difficult. But at every area, they were cheaping out with people. They were doing nothing to enforce masks. They were doing nothing to enforce things like, you can’t smoke when you’re walking around, it was absolutely dangerous. I did however, get some Butterbeer, and that is something that made it worth the trip. It’s way too expensive, but it is absolutely delicious.
We would like your questions and comments. Again, the reason I brought that up is one of the things you have to look at with a company is not just its balance sheet, not just how it does with finances, but how it does with operations. Can it really do things well? Can it handle a crisis? It’s something I really admire about Chipotle, I don’t own shares of Chipotle, but when they had their Salmonella scare and their E. coli scare they responded really quickly and it still took their stock over a year to come back. I can’t imagine there’s not going to be video shared on social media that do some damage to Universal Studios. That said, whatever their capacity was they maxed out because when we left at about three in the afternoon, they were only letting people in as people came out.