Vivendi Universal SA, the world's No. 2 entertainment company, and two Shanghai companies owned by the government plan to build the first foreign theme park in China's biggest and richest city, a municipal official said.
Hua Xinxiang, deputy director of information for the Pudong district of the city, said an agreement on the project will be signed tomorrow. He wouldn't comment on an Asian Wall Street Journal report that the park will cost US$870 million and could open as early as 2006.
Walt Disney Co in July declined to comment on media reports that it's in talks to build a Disneyland in Pudong, which could put the two parks only a few kilometers apart.
PHOTO: AP
Vivendi, Walt Disney, AOL Time Warner Inc and other companies are trying to expand to China as growth in the US and Europe stalls. China, whose 8 percent annual expansion ranks it among the biggest-growth economies in the world, is giving foreign entertainment companies greater access.
"The advantage of theme parks is that it's cash on the barrel; people pay to get into theme parks," said Andrew Collier, an analyst at CLSA Ltd. "The question is: Can these media conglomerates turn these theme parks into brand names and extend into other areas. We don't know yet."
Vivendi will announce the park tomorrow in California, the Journal reported.
Hua said a press briefing also will be held in Shanghai. Vivendi parks draw their themes from the studio's films, which include Jurassic Park, Terminator 2 and ET. The move comes as Vivendi Chief Executive Officer Jean-Rene Fourtou is trying to turn around the company, which booked the biggest loss in French history last year.
Fourtou is selling assets to repay debt and is pursuing Vivendi's transformation from a 149-year-old water utility into a rival to AOL Time Warner Inc, the world's biggest media and entertainment company.
Vivendi Universal's shares have fallen 74 percent this year.
Jim Yeager, spokesman for Vivendi's US park operations who's currently in China, didn't immediately return two telephone calls left at his office.
Vivendi Universal is in talks with Waigaoqiao Group Co, a state-owned property company, and Shanghai Jinjiang (Group) Holdings Co, which operates hotels, to build the park, the city official said. The two Chinese companies will have a majority stake in the park, the Journal reported, citing an unidentified Waigaoqiao official.
Universal may invest less than US$100 million on the park for about a third of stake, the paper said. It will also receive management fees for the park.
The park will be aimed at drawing Shanghai's growing middle class. The city's economy accounts for 5 percent of China's gross domestic product and 12.2 percent of the nation's revenue.
Per capita GDP in the city of 13 million was US$4,500 last year, the highest in the country.
Still, media penetration in China is low. China has a US$480 million film market, accounting for just 3.8 percent of the global market, according to CLSA's Collier.
"Obviously there is plenty of room for growth," he said.
"All the western media conglomerates are scrambling for an integrated strategy to approach Asia. Theme parks are just the tip of their ambitions, but it is the easiest low-hanging fruit."
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