Disney Gets Approval to Build Shanghai Theme Park

post from ShoppingBlog.com on 04 November 2009 03:44:00 PM. © ShoppingBlog.com

Disney Parks Logo Bloomberg reports that Disney has won a government approval to build a Disney Theme Park in Shanghai.

The agreement to construct Disney's fourth park outside the U.S. in the world's most populous nation "marks a very significant milestone," Chief Executive Officer Robert A. Iger said in a statement. Disney and its Shanghai partners are now allowed to move toward a construction and operation agreement, the statement said.

Disney's foothold in mainland China comes after a decade of negotiations and will cost 24.5 billion yuan ($3.6 billion), according to Hong Kong newspaper Wen Wei Po. The expansion targets the wealth of China's middle class and the fastest growth of any major economy as Burbank, California-based Disney suffers from lower spending at its U.S. theme parks, tumbling ad sales and falling DVD revenue.

"It gives Disney an opportunity to monetize its brand without necessarily having to produce filmed content," said David Bank, an analyst with RBC Capital Markets in New York. Expanding in China without facing the risk of regulatory hurdles is "the real key to making money in China for the media companies," he added.

Disney should not have any trouble finding people to visit the park. Shaun Rein, managing director of China Market Research Group, told Bloomberg that there are 80 million people within 3 hours driving distance of where the theme park will be built. The 1,700 acre park will be modeled after Disney's existing parks and incorporate characteristics from Shanghai. It will be 57% owned by China and 43% owned by Disney.

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