proposed merger of Cedar Fair and Six Flags is happening. If the deal comes through Thursday morning, I will update this post with those details. And if it does not happen, well, I will keep this post up for the inevitable next time that this rumor gets attention. [Update: The deal happened. It's a "merger of equals," but Cedar Fair's CEO is in charge, and the company remains at Cedar Fair's HQ in North Carolina.]Let's assume that the
How would these two theme park chains come together? What would stay and what would go as they combine operations across North America?
Let's start at the top. I cannot imagine that a combined company would not keep "Six Flags" as its consumer-facing brand. "Cedar Fair" has zero consumer brand value. While Six Flags might have somewhat diminished brand value these days, it enjoys massive brand recognition and the addition of several well-regarded Cedar Fair theme parks may help boost consumers' opinions of Six Flags, especially if the new company is to be run by former Cedar Fair leadership.
That said, there are at least a couple of current Cedar Fair theme parks that probably should not adopt Six Flags branding. We'll get to those in a bit.
Beyond park names, the merger of Six Flags and Cedar Fair creates some potential branding conflicts. Let's start with Six Flags Fright Fest versus Cedar Fair's Halloween Haunt. If I am running the new company, I would choose "Halloween Haunt" as the more valuable of the competing Halloween brand. "Six Flags Halloween Haunt" would be an entirely new brand that could reenergize Halloween events at (almost) all parks in the chain.
I also would be inclined to choose Cedar Fair's Winterfest brand over Six Flags' Holiday in the Park, simply because that's one word versus four. But Six Flags' holds a live trademark for its holiday event brand, while Cedar Fair does not have the same for its. If the new company can get a trademark for Winterfest as a theme park event, then go with that. Otherwise, it might be time for "Holiday in the Park" at most of the current Cedar Fair theme parks that stay open in November and December.
Six Flags brings IP licenses for DC Comics and Looney Tunes characters from its former owners at Warner Bros. Cedar Fair brings a license for Snoopy and the Peanuts characters that it inherited with its purchase of Knott's Berry Farm.
This is one area where I believe that this merger would provide a clear increase in value to the parks, as it could allow the Cedar Fair parks to dump the moribund Peanuts franchise for its kiddie lands in favor of the better-known Looney Tunes. (Again, with one exception.) The merger also could allow Cedar Fair to choose from various DC franchises in branding roller coaster and thrill rides, which could be a plus if implemented judiciously.
The new company's decision on its children's area could provide a tell as to other developments in the U.S. theme park business. If the new company does not move to expand its use of Looney Tunes, that could be an indication that Warner Bros. might not be inclined to extend its license with Six Flags. Disney would love for Warner Bros. to take back the DC rights and sell them instead to Universal, as that deal would make Universal more inclined to sell its Orlando rights to Marvel characters to Disney. But Universal would have zero interest in Warner Bros.' Looney Tunes, given the success of its own DreamWorks and Illuminations franchises, led by the Minions, whom I would argue are even more valuable brand than Bugs Bunny and Looney Tunes with today's young consumers.
So if Warner Bros. wants to keep the American theme park rights to Looney Tunes and DC together, Six Flags is its best - and perhaps only - bet... unless Warner Bros. has plans to get back into the U.S. theme park business itself.
Now let's get to that exception that I keep mentioning. Six Flags and Cedar Fair now operate parks in just two common media markets - San Francisco and Los Angeles. The San Francisco market is about to become irrelevant, but Los Angeles would present a big challenge for the new company.
The merger would bring the two "Great America" theme parks under the same ownership for the first time since they were Marriott's theme parks. But Cedar Fair has sold the California's Great America property, with a lease that will terminate the company's rights to operate the park within a decade. I would be surprised if a Six Flags/Cedar Fair deal did not accelerate the closure of California's Great America. Why put anything into promoting and operating a lame duck park when there's another park in the same media market (Six Flags Discovery Kingdom) that really could use some additional marketing and capital investment support?
In Southern California, both Six Flags Magic Mountain and Knott's Berry Farm can, and should, continue to operate. Both draw enough visitors to rank in the TEA/AECOM Top 20 for North America and both enjoy disparate fan bases on either side of Los Angeles that would not transfer easily to the other.
The challenge comes with branding. Six Flags long has promoted "Six Flags" as the primary branding for each of its theme parks, using the rest of each park's name only as modifier and national differentiator. In the LA market, "Six Flags" means Magic Mountain. Slapping the Six Flags brand on Knott's Berry Farm only would cause confusion.
That's why I would argue that Knott's Berry Farm should retain its own branding, not just for the park itself, but also for its Knott's Scary Farm and Knott's Merry Farm events. Let Six Flags Halloween Haunt/Fright Fest and Holiday in the Park happen up the 5 in Santa Clarita.
And let Knott's Berry Farm keep its Camp Snoopy, too. Magic Mountain already has a Looney Tunes area. There's no need to duplicate that in Orange County.
I also would pause before any rebranding of Cedar Point. Nothing that the company could do would boost the value of the Six Flags brand more than adding it front of the beloved Cedar Point name. But nothing that the new company could do would more damage its Cedar Point brand than slapping "Six Flags" in front it.
Six Flags Kings Island? Six Flags Carowinds? Sure, the former Paramount Parks has prepends before, and they can deal with them again. But I would tread very carefully before doing anything with the name of Cedar Point.
I see no reason why this merger would attract the attention of the Justice Department on antitrust grounds. First, the U.S. government seems to have forgotten that anti-trust laws remain on the books. Second, even the combined company would trail market leaders Disney and Universal by quite a bit. I think regulators are more likely to see these as troubled companies teaming up to try to survive rather than market leaders looking to create unlimited market power.
That said, with 25 parks after CGA's inevitable closure, the new company would include many parks that are dragging down its brand value. Even with a presumed increase in access to capital, there's no realistic way that the company could afford to install attendance-driving new rides every few years at each of these parks.
Therefore, the new company's managers ought to look at selling or closing its underperforming parks. Rank 'em by attendance, then start from the bottom of the list. If you find any takers, sell. If not, consider closing the worst performers, anyway.
And here is another area where a merger can create value. Even if the chain closes underperforming parks, the new company would have a stronger line-up of top parks to entice fans to buy chain-wide premium seasonal and annual passes or memberships. Knott's and Magic Mountain together? Cedar Point, Kings Island and Six Flags Great America? These are combinations that can drive sales, or at least upgrades, from more theme park and thrill ride fans, especially with more aggressive price increases.
That, in turn, makes more money available for the company to invest in its top parks. The Cedar Fair and Six Flags parks need better capital investment if they are to have any hope of remaining the popular destinations that they have been. A merger provides an opportunity to get that, but only if the company's new management does not fumble the bag when integrating the chains.
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