SeaWorld Drops as Killer Whale Controversy Hurts SalesCécile Daurat
SeaWorld Entertainment Inc. dropped to a record low after reporting earnings that missed analysts’ estimates and saying controversy over the treatment of captive whales in its theme-park shows hurt attendance.
The shares tumbled 33 percent to $18.90 at the close in New York, the lowest since they started trading in April 2013. Before today, SeaWorld had retreated 23 percent in a year following the release of “Blackfish,” a critical documentary about its performing killer whales.
The company acknowledged for the first time that pressure from animal-rights groups is reducing attendance, said Barton Crockett, an analyst at FBR & Co., calling second-quarter results “surprisingly weak.” The theme-park operator fought off a proposed ban on keeping orcas in captivity in California with a lobbying campaign that raised doubts about claims that the animals are harmed in its parks.
“Attendance in the quarter was impacted by demand pressures related to recent media attention surrounding proposed legislation in the state of California,” Orlando, Florida-based SeaWorld said today in a statement.
SeaWorld expects revenue to decline as much 7 percent in 2014. Sales fell 1.5 percent to $405.2 million last quarter, the company said, missing the $445.2 million average of estimates compiled by Bloomberg. Earnings of 43 cents a share also trailed the average prediction of 58 cents.
Attendance at the company’s 11 parks increased 0.3 percent in the quarter from a year earlier, reflecting better weather and a later Easter holiday this year, the company said. FBR had estimated 4.3 percent growth, Crockett, who rates the shares market perform, said in a note to investors.
Before the controversy over “Blackfish,” SeaWorld sold shares at $27 each in its April 2013 IPO. Blackstone Group LP, which controlled the theme-park operator, chose an initial public offering for SeaWorld, snubbing takeover bids from Apollo Global Management LLC and Onex Corp., because the firm expected an IPO to yield better returns over time than a sale, a person familiar with the matter said last year.
Blackstone, which had owned all of SeaWorld’s equity, has since cut its stake to 22 percent, according to data compiled by Bloomberg.
In response to the slowdown, the company has hired an adviser to identify ways to cut costs this year and next, SeaWorld Chief Executive Officer James Atchison said on a conference call today. The savings will be used to reinvest in new attractions and to increase stock buybacks.
SeaWorld will step up promotions, such as weekday discounts, to increase traffic at its parks. The company will promote events around the Halloween and Christmas holidays to boost attendance in the second half of the year, Atchison said.
Amid lobbying by SeaWorld, a California legislative panel in April put off for at least a year a proposed measure that would ban whale breeding and the use of the animals for entertainment.
In June, two members of Congress from California successfully placed an amendment in a farm appropriation bill calling for an updating of U.S. regulations about keeping orcas and other cetaceans in captivity, the Los Angeles Times reported on June 13.
SeaWorld is ramping up efforts to blunt criticism from animal-rights activists and protect its brand, and to counter the media attention from legislation proposed in California, Atchison said.
“We’ve seen the early benefits of these initiatives and expect to build on them through 2014 and into 2015,” Atchison said on the call.