We've known that Blackstone Group, the private investment group that bought SeaWorld for $2.3 billion in 2009, has been looking to cash out. Reuters broke the story about SeaWorld's IPO last month, and now the wire service says that SeaWorld might be entertaining offers to buy the whole thing, instead.
The Reuters piece specifically mentioned Six Flags and Apollo Global Management, which recently bought Great Wolf Resorts. But a sale to Apollo would be exchanging one private equity owner for another. You've got to figure that, one day, Apollo would want to cash out, too. So where does SeaWorld end up in the long term?
With 23.6 million visitors in 2011, according to the TEA/AECOM theme park attendance report, SeaWorld Parks and Entertainment attracted nearly as many visitors as Six Flags, which drew 24.3 million that year. But SeaWorld does not see itself in the same class as Six Flags. Speaking with its managers, it's clear that SeaWorld aspires to take on Universal and Disney, which attract millions more visitors a year and can draw upon the deep pockets and intellectual property of parent corporations.
SeaWorld needs to get bigger to play with Disney and Universal, which suggests an acquisition or merger with some other entertainment firm. But which one?
Let's look at the possibilities:
The Walt Disney Co.
Disney's never bought another company's theme parks, so this seems an impossibility. If SeaWorld had built four-star, convention-friendly hotels at each of its properties, I suspect that Disney would have given SeaWorld a close look, simply as an option for a substantial expansion of DVC. SeaWorld/Busch Gardens hotels and theme parks could have been popular options for DVC members looking beyond Orlando and Anaheim. But SeaWorld didn't get into the hotel resort business, so I think you safely can scratch Disney from this list.
The owner of the Universal theme parks just wrote a big check to Blackstone, buying out its half of the Universal Orlando Resort. But the two chains would appear to complement each other creatively, with Universal developing attractions from the worlds of fantasy and SeaWorld creating ones from the world of nature. Universal Orlando and SeaWorld Orlando have packaged tickets in the past, and coming together under the same owner would help create an even more compelling challenger to Walt Disney World. But what about the rest of the chain? Universal Studios Hollywood and SeaWorld San Diego stand too far from each other to generate much synergy. And I can't see that Universal has any desire to enter SeaWorld's other markets. Universal doesn't have a timeshare product like DVC.
The Reuters story estimates SeaWorld's market cap around $4 billion, which would make it more valuable than Six Flags, which has a market cap around $3.3 billion. So stop me if you've heard this story before. Premier Parks' leveraged buyout of the larger Six Flags chain (whose name it took) nearly sunk the chain, ultimately leaving it in bankruptcy. New CEO Jim Reid-Anderson has gotten Six Flags' finances in order, but does the chain really want to jeopardize its new-found fiscal health with what would have to be another leveraged deal? Wouldn't SeaWorld's building and attraction standards suffer with an over-leveraged new owner that didn't exactly have a sterling reputation for thematic quality in the first place?
That said, the geographic markets line up well here. The only markets where both chains have parks are San Antonio and Southern California. In SoCal, SeaWorld San Diego and Six Flags Magic Mountain stand more than 100 miles apart, so there's not much synergy there. But SeaWorld San Antonio and Six Flags Fiesta Texas could be packaged into an attractive two-park ticket. And would Six Flags executives or roller coaster fans salivate more over the prospect of Busch Gardens Tampa becoming the long-rumored Six Flags Over Florida?
With a market cap of just $2.0 billion and fewer annual visitors than SeaWorld, Cedar Fair also would be trying to buy a chain bigger than it is. Cedar Fair made a big acquisition of Viacom's Paramount Parks not too long ago, so it's hard to imagine Cedar Fair coming up with the cash to pull off an even bigger deal for SeaWorld. And the markets don't line up as neatly as they do with Six Flags -- what would happen with Kings Dominion and Busch Gardens Williamsburg under the same owner? That said, Cedar Fair must covet SeaWorld's license with Sesame Street, which would represent a huge upgrade over the moribund Peanuts franchise for its expansive kiddie lands. New Cedar Fair CEO Matt Ouimet is a veteran of Disney and Starwood, so he knows world-class theme parks and hotels and might be able to do wonders with SeaWorld's assets. If only he had the cash.
Merlin is the world's second-biggest theme park chain by attendance (behind Disney), and has experience owning animal attractions with its SeaLife aquariums. Merlin's Legoland theme parks offer an education-friendly message that would complement SeaWorld well. But there are two huge challenges blocking this deal. First, Merlin's policies prohibit the type of animal performances SeaWorld's known for. And, second, Merlin's biggest owner is… Blackstone. Blackstone's looking for a payday here, not a journal transfer. Forget it.
How about an entertainment company that's not yet in the theme park business? If any of the nation's top cable channel owners wanted to challenge Disney and NBCUniversal by expanding into theme parks, Discovery Communications buying SeaWorld would seem the most logical thematic fit. The creators of "Shark Week" owning SeaWorld? With Discovery Channel and Animal Planet in the corporate portfolio, synergy abounds with this deal. This would also allow SeaWorld management to stay in place, while giving the company some additional financial resources to expand into hotels and TV-themed attractions. C'mon, who wouldn't want to see a Mythbusters theme park show?
Your other major cable-channel companies are Time Warner, Viacom, News Corp, and Scripps, but Time Warner and Viacom abandoned the theme park business in the past, selling Six Flags and Paramount Parks, respectively (see above). I cannot imagine SeaWorld's environmental messages fitting into the News Corp portfolio, either. That leaves Scripps, which has a market cap of $8.8 billion, but Food Network and HGTV aren't nearly as complementary to SeaWorld as Discovery's properties.
So for the sake of this little hypothetical, let's assume that one of these companies someday will either own or be owned along with SeaWorld Parks and Entertainment. Which company would you like to see become SeaWorld's new home? To keep us with five options, I'm eliminating Merlin and Scripps, leaving you with a choice of Disney, Universal, Six Flags, Cedar Fair and Discovery.
Please tell us in the comments why you chose the option you did. And thank you, as always, for reading Theme Park Insider. Have a great weekend!
Bankruptcy court got Six Flags' finances in order and Jim Reid-Anderson took over as CEO with roughly a clean slate to work with. It's true that former CEO Mark Shapiro tried to get Six Flags' finances in order, but he wasn't able to do so.
Don't give credit where credit isn't due.
I think Universal would make the most sense, but Disney would be awesome!
Disney buying Sea World/Busch Gardens would give them their coveted Virginia park and also an area for a thrid resort area in Texas and that's west of the Mississipi so Marvel characters could be used at a second gate
Sea World in Orlando is actually as closer to Universal's property than Animal Kingdom is to the Magic Kingdom
Universal buying Sea World would allow either the complete overhaul of Wet n Wild or closing of Orlando's location and rely on Aquatica
With Sea World's attendance being added to Universal's and a bump from package deal:How close would their domestic attendance's be to Disneys
Merlin would have major parks on either side of Legoland in Florida to accent its attendance and their involvement in I Drive Live complex for Orlando
It would also give Merlin world class theme parks in America, which would take years if not decades to duplicate
Merlin policies could be changed.
I don't know too much about Apollo, but I think Six Flags would be a disaster for the parks. Even though I've never been a big fan of Sea World, they are known for being very clean and well kept up places, whereas Six Flags can be at times just gross places to be that just feel...sticky...is the only word for it.
Universal is the second choice. Universal's focus on technologies in attractions makes an acquisition of SeaWorld a plus. They can bring SeaWorld to a new level. The biggest markets in California and Orlando will see a boost in attendance. However, the negative is the focus on the park away from movies unless they decide some movie properties should be integrated with SeaWorld.
The third choice is none of the above. I think Six Flags and Cedar is a step down. Six Flags and Cedar are all about coasters. They have no experience with themed entertainment. Of course, certainly SeaWorld can elevate them, but they can bring SeaWorld down.
That said, if SeaWorld would be happy with occupying a second tier, between Universal and Six Flags, and Blackstone is happy with a series of public offerings, the IPO's a fine route. But I get the feeling that's not the case. It really sounds like Blackstone would prefer the straight sell.
Universal buys SeaWorld Orlando and SeaWorld San Diego (and their associated properties). Six Flags takes the Busch Gardens parks and SeaWorld San Antonio, which gets rebranded. Merlin gets Sesame Place and the Sesame Street license for the Legoland parks.
Or Universal retains SeaWorld's Sesame Street license (Universal already has the international license for those characters), and Sesame Place goes to Universal or goes away. (Maybe the property goes to Merlin as the site for a Legoland in the northeast? Merlin's been rumored to be looking at Rye Playland as a new Legoland site, so the region is on the chain's radar.)
I Respond: I am skeptical about the wisdom of building a theme park in Anarctica. They won't get the required local traffic.
Damn! There I go again pulling quotes out of context.
>> SNARK <<
That is all.
But think you kinda have to keep the 3 Sea World Parks together not just for branding but also logistics for animals and trainers.
Now the North America Sesame Street license could be interesting in Orlando as a land for 3/4 gate with LOTR (yes that again)
I think if it was just Sea World Orlando, Discovery Cove and Aquatica the ink would already be dry for Comcast
If a sale is to occur, then a sale to Discovery would be a good match as Sea World Parks and Entertainment is all about education and environment. I hope they keep the company as a whole and not split it up.
For Disney it would provide too many headaches. In an ideal world, no matter who buys the parks, the SeaWorld and, to a lesser extent, Busch brands should remain intact as they are a valuable asset. Disney, though, would likely be inclined to give the parks a Disney overlay, which may not work, especially in Orlando where SeaWorld is somewhere to go for something different to the Mouse.
Universal are looking at considerable capital expenditure on Orlando Potter Part Two and Hollywood Potter part one, not to mention lesser projects such as transformers at Universal Studios. Heed a lesson from Six Flags and don't spread your finances too thin, it will only lead to quality suffering in the long-term.
Cedar Fair and Six Flags really don't have the capital to make any purchase of this scale without putting their serious financial strain on the business.
Merlin is the most interesting. Blackstone want SeaWorld P and E off the books, but it may be just as much because they don't want to handle the management side as it is for a quick profit. Merlin are very good at what they do, and dominate the UK theme park industry, if a deal was struck for Merlin to take the parks then they'd likely prosper, but as stated by Robert that is very much dependent on Blackstone's intentions.
Coaster fans would not be salivating since we know that BGT has one the best coaster collection in the country especially with the pretty lame looking coasters Six Flags and Cedar Fair have been coming out with when they're not just moving the coasters to other parks.
Also compare the maintenance of Scorpion to the poor state of Revolution.
I could easily see a joint venture with Discovery communications. Discovery's market cap is about 16B or 4 times either Cedar Fair or Six Flags while Herschend is private. It also ties nicely into their existing products. However, they don't know the theme park business while Herschend brings that to the table.
I could also see somebody like Marriott or Intercontinental Hotels as a potential joint venture partner.
Several times, Robert has extolled the virtues of moving beyond the bigger, faster, more intense coaster race. I would say in this way, BG and SW are in lock step with Universal and Disney. Whereas, Cedar Fair and Six Flags have merely maintained status quo in themeing and overall guest experience (and that's a more than generous assessment.)
The only way I could see either of those companies buying the Seaworld portfolio and being successful is if they realign their current model to be in sync with the Seaworld model rather than the other way around. If not, they risk (personal this isn't risk it's guaranteed) that they will alienate a large portion of their base. I have owned a BGW platinum pass for the past 2 years and a annual pass for the 4 before that. If I saw so much as a suggestion that BGW was headed towards the likes of Six Flags America I would drop the pass like the stinky bag of poo it would become.
As for Apollo, the Great Wolf Lodge experience seems like the fool's Disney. Everything , aside from the water park itself, feels amateurish and half way done. The themeing is skin deep and doesn't speak of any investment by the creators as to it's meaning. Apollo buying the Seaworld portfolio would be like the owner our local college summer ball team, the Staunton Braves, taking the helm of the NY Yankee's.
I voted Cedar Fair for one reason: Matt Ouimet. OK, another reason: they seem to be serious about keeping Knott's up to snuff with the Log Flume rehab and the previous referb of Ghost Town.
What new markets?
There has been zero expansion in the United States for more than 40 years (Walt Disney World/Magic Kingdom opened in 1971). If you're talking about expansion in other parts of the world then fine, but Disney hasn't had any strategy of opening in new US markets and I think largely because there really are no additional markets that fit their current operating model.
Why is Disney even in this discussion? They have never expanded by acquiring existing theme parks and I doubt they will in the future. All of their parks have been designed in house and built from the ground up with their own themes and attractions. The theme park division is just one of many in the Walt Disney Company. In fact, I would argue that within the theme park division park operations is secondary to creating themes and attractions.
A couple of years ago there were rumors that Disney was considering selling its US parks. The rumor made sense since the two parks in Japan are considered to be Disney's finest from both a creative and operational stand point and Disney doesn't own either park.
If this had panned out then Disney would focus on what they do best and the park owner would license the creative allowing them to focus on what they do best - park operations.
My point is Disney should not attempt to acquire parks, but should instead continue to focus on building amazing theme parks and attractions. That's the best approach for Disney.
a side note i know my spelling is bad so forgive me
However, the point of me saying this isn't to point out that you can't write, but to say that I think you're rude and disgusting.
You said "Six Fags" and you intentionally said that because you correct yourself when you immediately follow it and type "oh i mean six flags". If you knowingly make an offensive error then why didn't you just delete it and type the correct word "Flags"? I suspect it's because you intentionally meant to offend others by using the word "Fags".
Move on. This site is great because generally people like yourself don't post here! If Robert is wise he will ban you since you're contributing nothing that benefits TPI.
I've heard nothing but great things about the animal care and attractions at Six Flags Discovery Kingdom.
I'm not too sure if I'd like SF buying out Sea World/Busch Gardens. I think Busch Gardens/Sea World are an entirely different entity & should remain that way...they should be bought out by a company (or companies) that would keep the parks' integrity and differences, compared to other parks, in place.
The reason Worlds of Adventure failed had to due with Six Flags' inability to run the giant park. Therefore I hope with all my heart that they do not buy SeaWorld, I voted for Universal.
MGM Studios was built from the ground up by Disney during the Michael Eisner years. The only reason they used the name MGM was to lend credibility associate with other major live action Hollywood studios.
They changed the name several years ago after a long battle over the right to use the name with the owner of the name.
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