Shanghai Support to Provide Welcome Tonic for Disney

Time to turn our attention to Disney (NYSE: DIS), which was has been the subject of a slew of recent media reports on its plans to build a park in Shanghai. (English article) Most of those quote Shanghai Mayor Han Zheng as saying the park’s initial phase will cost just under $4 billion, though none says how much of those funds will come from Mickey and how much will come from Shanghai. But given Shanghai’s near fanatical zeal to land this project and one-up rival Beijing, I wouldn’t be surprised to see the next Disneyland’s host city forking out the lion’s share of money for this project, similar to what an overly zealous Hong Kong did about a decade ago. This is brilliant strategy by Disney, which gets something like 40 percent of its profit from its theme parks, in taking advantage of the huge popularity of its characters in China. I see major contributions from this park to the company’s bottom line once it opens, as hordes of Mickey fans from throughout China make the pilgrimage to Shanghai to see their favorite mouse in person.

Bottom line: The hype surrounding China’s first Disneyland in Shanghai is just getting started, with handsome rewards in store for Disney down the road.