Universal Unveils Chinese Project

Universal Parks & Resorts has cleared a great bureaucratic wall in China.

The unit of Vivendi Universal unveiled a preliminary deal today to build a theme park in Shanghai after lengthy negotiations gave it the early foothold over rival Walt Disney Co. in China’s largest city.

The Universal unit and Shanghai officials reached an agreement in principle to build the park along the Huangpu River and open it in 2006, although company sources cautioned that more government approvals would be needed.

Disney is well underway with its own plans for a theme park in China: Groundbreaking for Hong Kong Disneyland is scheduled for January, with the opening slated for 2005 or 2006. Disney also had been engaged in discussions to build a second park, in Shanghai or elsewhere, Disney Senior Vice President Leslie Goodman said.

The announcement marks a symbolic victory for Universal against Disney.

Still, analysts said they don’t consider the jump of a few years all that significant over the long term given China’s population of 1.2 billion and a burgeoning middle class that is expected to expand for decades.

“There will be more than enough opportunities there,” said Michael Demetrios, chief executive of Los Angeles- based Intra-Asia Entertainment Corp., which is developing theme parks in China.

Universal has been negotiating to build a park in Shanghai for more than a year. The park appears to be a sweet deal for the company and Vivendi Universal, its financially ailing parent, and an indication of how much China wants the project.

Chinese officials said the Universal project could create thousands of jobs and help turn Shanghai into China’s leading tourism center.

Universal didn’t disclose how it beat Disney to the punch, but said it has been scouting out the market for many years.

“We are both world-class theme park operators, we just worked harder in this project and got it,” Frank P. Stanek, a Universal development official, said at the ceremony.

Sources said the company probably would invest about $75 million in the park, estimated to cost about $1 billion. Its quasi-government partners, Shanghai Waigaoqiao Group Co. and Jinjiang Group Co., would fund the rest. In return, Universal would get a stake of about one-third and also reap management fees for operating the park, people familiar with the details said.

Universal Shanghai would be modeled after the company’s Orlando, Fla., theme park and would feature high-tech rides and movie and TV themes.

Vivendi’s U.S.-traded shares rose 10 cents to $16.22 on the New York Stock Exchange Friday after the news surfaced in the Wall Street Journal.

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Ni reported from Shanghai, Bates from Los Angeles.