Sunday, December 10, 2017
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SeaWorld reports loss as 'Blackfish' and competition continue to haunt fortunes

SeaWorld Entertainment reported a second-quarter loss on Tuesday and blamed its attendance woes on reduced national advertising, its persistent "perception issues" over its treatment of orcas and competitive pressures from rival theme parks.

The company reported a second-quarter loss of $175.9 million, after reporting a profit in the same period a year earlier. SeaWorld's stock has fallen 28 percent since the beginning of the year.

In a conference call on Tuesday, CEO Joel Manby noted that the five-point plan he unveiled when he was hired in 2015 to turn the company around was a "three-year effort. He said he sees signs of hope.

"While we are making progress in key areas of our plan, we are not satisfied with our results for the quarter," Manby said. "This quarter provided us with an understanding of what is working and where we need to make adjustments. We are increasing our investment in national advertising to generate sufficient awareness of our brand attributes and strong new rides and attractions, developing a new national marketing campaign emphasizing our distinct experiences, and reinvesting in our reputation messaging to target perceptions in key markets, particularly California."

California has been particularly unforgiving of SeaWorld ever since the 2013 documentary Blackfish questioned the park's handling of killer whales. Manby and his chief financial officer both noted the "perception issues" in California that continue to plague the company.

"How much lower will SeaWorld's profits go, before the company heeds PETA's call to move the surviving animals to coastal sanctuaries?" said a statement released Tuesday from Tracy Reiman, executive vice president of the animal welfare organization that has hounded SeaWorld in social media.

There was no mention of talk that the company could bring in a hefty sum by selling off Busch Gardens in Tampa and Virginia. On Monday, the chief financial officer of Merlin Entertainments, parent company of Legoland, disclosed its interest in buying Busch Gardens during a conference call with analysts.

SeaWorld has so far offered no comment on reports by the Deal Reporter, a financial news service, on the hiring of Evercore, a firm specializing in finding a buyer for mergers and acquisitions.

"This is probably the worst quarter for them," leisure analyst Bob Boyd of Pacific Asset Management said after Tuesday's conference call. "2017 was supposed to be a year of growth and it looks to be pretty minimal."

Boyd said he would be surprised if SeaWorld pursued the idea of selling off Busch Gardens, since it would be a sign of desperation.

"Those are two of their best assets," Boyd said. "As a company, they are moving away from a SeaWorld model into more of the Busch Gardens model," of a zoo with roller coasters, rather than performing animals.

"If you sell off those assets, you are left with a company that's focused on SeaWorld and its brand challenges," Boyd said."

On Tuesday, SeaWorld noted that attendance was up among those guests coming from within a 300-mile radius to its Orlando, Tampa and San Antonio parks. In San Diego, attendance is still down overall. 2017 season pass sales through July are up in all major markets outside of California

The earnings report follows four consecutive quarters of slumping revenues and either flat or declining attendance across SeaWorld Entertainment's 12 parks.

In April 2013, SeaWorld made its debut as a publicly traded company and raised more than $700 million as the company's stock debuted at the top of its expected range. But then came Blackfish. SeaWorld replaced the CEO with Manby, who had previously run Dollywood.

SeaWorld has partnered with the Humane Society and early last year announced an end to its orca breeding program and theatrical performances. Those are being phased out in favor of more nature-based encounters.

SeaWorld is also surrounded by deep-pocketed rivals Disney and Universal who have invested in blockbuster exhibits in recent years.

The Orlando park saw a decline in attendance in June, just as Disney opened the Pandora, the World of Avatar at Animal Kingdom. Manby's previous outlook was that a rising tide lifts all ships, one analyst suggested, but Manby was asked if he should reconsider that as even bigger attractions such as a Star Wars land are coming in the next few years.

"We know where we are winning, within 300 miles, and there is room to grow there," Manby said. He also that the company is shifting away from the $100 price point for admission found at Disney and Universal.

Two years ago, admission to SeaWorld was $99. Now, you can get into SeaWorld for $79.99 and multi-park passes cost $59.99 per park.

 

Contact Sharon Kennedy Wynne at swynne@tampabay.com. Follow @SharonKWn.

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