China Theme Park Doubts Rise

On the eve of NBC’s marriage with Vivendi Universal’s U.S. entertainment assets, questions are mounting over the future of Universal’s ambitious theme park foray into mainland China.

Vivendi Universal’s parks and resort unit on Tuesday laid off two dozen people hired to work on an amusement park planned for Shanghai. It was just the latest cutback in the Orlando-based design group, which has seen its ranks dwindle from 100 to about half that over the last five months.

The layoffs follow reservations expressed by Universal’s new corporate owners, leaving the once-heralded China expansion in doubt, according to sources familiar with the project.

“It’s on life support,” one source said.

Universal executives, however, stressed that the project was still alive and well, and that the layoffs merely stemmed from bureaucratic delays in China.

“They haven’t approved this as quickly as we thought they would,” said Wyman Roberts, marketing chief for Universal Parks and Resorts.

He said the project was not in trouble. “We’re moving forward,” he said.

Roberts said the company remained committed to Shanghai, but that further work was not warranted until the necessary approvals had been received.

“It would be like building your house without getting your permits,” he said.

Universal has completed early design work for the park, which is slated to open in 2006. Although a site has been cleared, no construction has begun.

The project’s delay comes more than a year after Universal executives heralded a preliminary deal for a $1-billion park in Shanghai, besting its rival Walt Disney Co. in the race to open a park in China’s largest city.

Contributing to the delay, sources familiar with the project say, is concern on the part of Universal’s partners in China about what will become of the theme park group in the wake of Universal’s acquisition by General Electric Co.-owned NBC.

The formal announcement of the acquisition is expected today.

Competition might also be a factor. Disney, which is building a Disneyland park in Hong Kong set to open by early 2006, also has been aggressively lobbying authorities in Shanghai to open a second park there.

In addition, executives at NBC and its parent have made no secret of their disinterest in the high-cost, low-margin theme park business, which has been buffeted by a travel slump since the Sept. 11 terrorist attacks. GE Chief Executive Jeffrey Immelt expressed reservations about the Shanghai project after a briefing this year by Universal executives, sources said.

Many industry analysts believe that GE wants to unload the theme park business but will wait to do so until the economy improves.

Universal Shanghai would represent a springboard into China, which boasts a population exceeding 1.2 billion and a burgeoning middle class.

Universal was expected to invest about $75 million in the park, estimated to cost about $1 billion. Its quasi-government partners, Shanghai Waigaoqiao Group Co. and Jinjiang Group, would finance the balance. Universal would get a stake of about one-third and a management fee for running the park.

Orlando Sentinel staff writer Sean Mussenden contributed to this report.