Six Flags, Paramount, Cedar Fair: What's next in the theme park business?2006-05-23
By Robert Niles: For the first time since I started this site, nearly seven years ago, there is stability in the ownership of the U.S.'s top theme park chains. Disney's seen Robert Iger take over for Michael Eisner as it has installed a smart new management team over its parks. Dan Snyder's Red Zone, LLC has ousted the former Premier Parks management from Six Flags. NBC bought Universal from Vivendi. Legoland's found financial security under ownership by Blackstone-backed Merlin Entertainments.
And now, Cedar Fair has bought Paramount Parks from CBS.
Ownership and management stability is unquestionably a good thing for capital-intensive businesses like theme parks. Without it, managers too often focus on the short term and hesitate to approve the multi-million dollar, multi-year projects necessary for theme parks to continue building their attendance.
But don't expect these financial deals to create peace and love in the theme park industry. Nope, the buyouts signal that this industry will no longer tolerate passive management. Attack, or be attacked. If you are not committed to fight your competition, get out.
The Cedar Fair/Paramount deal cannot be making anyone happy at Universal. Industry leader Disney's primary competitor just dropped from number three in overall attendance among six major U.S. theme park companies to number four out of five. Attendance at its parks in Orlando and Los Angeles has disappointed. Granted, any reader of this site could have told Universal management that if a company debuts as few new rides as it has over the past six years, it should expect its attendance to tank. Ever since NBC bought Universal, employees have whispered that the Peacock might ditch the parks. It's gut-check time now. Invest, or look for a buyer who will.
If the company doesn't, not only will it face continued pressure from a resurgent Disney, but it might fall from the number two spot behind the Disneyland parks in Southern California to improving Six Flags and Cedar Fair parks. It's not hard to see that a Knott's Berry Farm with a Kings Island-style Nickelodeon-themed land could bite deeply into attendance at other SoCal parks. A more family-friendly Magic Mountain, if delivered as new Six Flags CEO Mark Shapiro has promised, could squeeze Universal Studios Hollywood from the northern side of the market, as well.
As for Six Flags, if Shapiro thought he had time to steer his chain's focus from thrill-seeking teens to families, that time is up. Cedar Fair now owns the Midwest and Mid-Atlantic regions of the country. Its Nickelodeon characters resonate far more with today's kids than Six Flags' Warner Bros. toons.
That said, the next successful, story-driven themed attraction that Cedar Fair builds... will be its first. Neither Cedar Fair nor Six Flags has shown the ability to create the themed attractions that made Disney the industry leader and Universal its once-strongest challenger. Paramount, however, has shown recent promise in this area. With Cedar Fair CEO Dick Kinzel retiring, will there be room in Cedar Fair management suite for Paramount Parks' creative talent? Or will Six Flags take this opportunity to snatch a few leaders with vision?
And here's the biggest question: Will new creative hires matter? They won't if recent park-buying sprees have left the companies with too little money in the bank to pay for whatever new rides their creative teams can dream up.
And what about Busch, now bringing up the rear among U.S. theme park chains, dropping from fourth out of six to five out of five? Busch quietly has been running some of the industry's finest parks. The company has shown that it is neither unable nor unafraid to commission to high-budget, top-quality story-driven themed rides. But it is still a relatively small entertainment business appended to a multi-billion dollar brewery company. Where's the fit? CBS's desire to focus on its core business prompted it to sell the Paramount Parks, and theme parks were a far stronger fit with CBS's business than they are with Busch's. Could CBS's move prompt similar thoughts at Busch? At the very least, all this dealing ought to remind folks how ridiculous it is that a brewery company owns a park themed to Sesame Street characters.
Which brings me to Merlin. Legoland's new owner already has committed to building a new park in the United States within the next five years. While Merlin owns just one park in the United States, Legoland California, it is backed by the wealthy Blackstone Group, half-owner of the Universal Orlando Resort. In addition to the three European Legoland parks, Merlin owns SeaLife Centres, a chain of aquariums in Europe that its CEO has said the company wishes to bring to America. Given Merlin's focus on family entertainment with an educational flavor, it would seem an ideal conceptual fit with Busch's parks, and you can't tell me that Merlin wouldn't love to have the SeaWorld brand.
Merlin's CEO told TPI earlier this year that the company is looking to expand and to create Disney-style, multi-park resorts. If Busch ever decides to get out of the theme park business, Merlin might be a logical candidate to make a bid. And the Blackstone connection continues to tempt theme park fans with visions of some sort of Merlin/Universal Orlando deal.
So maybe all is not settled yet. Thank goodness. I'd hate to think that the industry wouldn't leave us with anything to talk about.
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