SeaWorld's "Blackfish" Controversy Performed Another Trick

Aquatic amusement park company SeaWorld  (NYSE: SEAS  ) was back in hot water last week after a business journal caught the company inflating the results of an online poll. The poll question dealt with whether the recent documentary Blackfish had changed reader opinions about SeaWorld. 

In the failed attempt to alter poll results, SeaWorld pushed itself back into a difficult public-relations battle that's taken the wind out of share prices. Can SeaWorld improve its performance? Or should investors instead turn to the amusement park companies Walt Disney (NYSE: DIS  ) or Cedar Fair (NYSE: FUN  ) ? 

SeaWorld's woes stem from the documentary Blackfish, which tells the story of a SeaWorld orca responsible for the deaths of three employees. Blackfish debuted at Sundance early last year, but it gained a much larger audience when it was broadcast on CNN in October. The film became available on Netflix last month.

Backlash intensified as Blackfish found more viewers. And that backlash started to hit SeaWorld where it hurt when a number of musicians began canceling shows at the parks. In the midst of all the negative press attention, SeaWorld reported a dwindling summer attendance.

That raised an important question: Do SeaWorld's problems run deeper than this controversy? 

Fanning the fire
SeaWorld naturally went on the defensive, but one attempt backfired last week. The Orlando Business Journal had posted an online poll asking readers: "Has CNN's 'Blackfish' documentary changed your perception of SeaWorld?" Results poured in that indicated 99% of respondents had voted "No," which seemed an oddly high number to vote in either direction. So the Journal conducted an investigation and tracked more than 54% of the votes back to a single IP address. And that IP address belongs to SeaWorld. 

The Journal points out that the tampering wasn't even necessary, since 95% of the non-SeaWorld respondents had actually voted in favor of the company. But the true results don't necessarily mean customers don't care about Blackfish. The total number of votes was 328 at the time the Journal began investigating -- and that counts SeaWorld's votes. So it's a small sample size. 

Online polls aren't the best evidence that customers have turned away from SeaWorld. But attendance numbers do paint a concerning picture. 

Falling attendance
Most of SeaWorld's revenue comes from admissions, or ticket sales. In the third quarter, admissions accounted for more than 63% of total sales. Admissions were up 5% year over year, which looks encouraging at a glance. But the growth was due to a ticket price increase. Actual attendance was on the decline during the all-important summer season. 

Attendance in the second quarter, which included June, was down 9.5%. The number improved in the third quarter, but only to a drop of 3.5%. The company blamed adverse weather conditions for the poor summer performance.  

But neighboring Walt Disney World parks didn't suffer a weather-related attendance drop. Disney didn't break down specific attendance numbers, but disclosed in its fourth-quarter earnings call that the park in Florida had record attendance. 

Cedar Fair's parks also had a better summer than SeaWorld. The Cedar Point owner reported third-quarter attendance as flat compared to the prior year -- a number that jumps to 2% growth when excluding two water parks the company had sold between the two periods. 

So the drop in SeaWorld attendance had more factors at play than weather. Was Blackfish backlash one of those reasons? Possibly. But at the end of the day, it really doesn't matter why. It only matters that it happened. And the drop marks another problem that's dogged the company since its IPO in the spring, which also raises the question of whether the IPO was a great idea in the first place. 

The Blackstone Group paid $2.3 billion in 2009 to purchase SeaWorld from Anheuser-Busch and took the company public in April of this year. Blackstone received about $500 million in proceeds. Blackstone had a 63% stake initially, but recently sold more SeaWorld shares, dropping to a 40% stake.  

Foolish final thoughts
SeaWorld's in a bind. The Blackfish controversies continue, and the summer attendance drop proved disappointing from a business standpoint. Investors considering a theme-park investment might consider Cedar Fair or Disney, which has multiple entertainment industries in the bundle that would help offset any potential future drops in guests at its parks.

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Read/Post Comments (7) | Recommend This Article (3)

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  • Report this Comment On January 10, 2014, at 7:22 PM, maxo789 wrote:

    SeaWorld is a horrible investment. Too much controversy around this in an industry based on public opinion and reputation. Might not be immediate but as more and more bad PR comes there way it's only going to get worse. Time to stop the orca shows and just concentrate on rides. Let aquariums deal with the fish.

  • Report this Comment On January 11, 2014, at 9:36 AM, andypsu71 wrote:

    I used to be a fan of Sea World. I grew up in central Florida and would visit frequently.

    The last time I was there was a month before Dawn, the trainer, was killed. I even had my picture taken with her.

    I had an opportunity a couple times to "party" at EPCOT with a sr. level manager outside of Sea World. She shared things with me that werent covered in Blackfish.

    After watching Blackfish, I will never support the Park again. I've spoken with many friends in the area and none of them have said they will support them either. It is very obvious that Sea World doesn't know what to do fix their image. At this point, the only thing Sea World should do is admit wrongdoing and work on rehabilitation of the orcas back to the sea.

  • Report this Comment On January 11, 2014, at 12:49 PM, spiritpen wrote:

    Seaworld needs to release these orcas- captive born or not- to conservation groups who can sea pen them for later release. Admit they were wrong, concentrate on true water fun, and child-themed ocean wonder education, and all will be forgiven. But they need to move fast with it. Times change, people and corporations change. Seaworld must change and soon- their survival is at stake.

    joey racano, director

    oceanoutfallgroup

  • Report this Comment On January 11, 2014, at 1:26 PM, VeganHypocrisy wrote:

    The alleged inflation of an online poll's numbers have nothing on the amount of disinformation, scare tactics, and outright lies coming from this PETA-funded Animal "Rights" cult propaganda piece, which isn't nearly as effective or as widespread as it's fanatical supporters are desperate to convince everyone.

    Like The Cove, When a Tree Falls, Earthlings, Food INC and every other bit of Animal "Rights" fanatic propaganda, nobody will see this except the die hard cultists and terrorists and it will be forgotten within two months.

  • Report this Comment On January 12, 2014, at 10:05 AM, hbrown1125 wrote:

    If "Blackfish" was just a two month type trend like a previous comment stated, we wouldn't STILL be talking about it.

  • Report this Comment On January 12, 2014, at 1:17 PM, zorro6204 wrote:

    SeaWorld has become synonymous with evil. I don't know how they dig out, if they retire their killer whales and stop the breeding program it guts them of their number one draw.

    I'm not a fan of government interference, but in this case I would fully support a ban. As to what happens to SeaWorld stockholders, I could care less, it's a minor issue compared to the abuse.

  • Report this Comment On January 12, 2014, at 2:08 PM, Jenniferinfl wrote:

    I saw this. My beliefs fall in with the "Animal Welfare" clan rather than the "Animal Rights" clan. Even so, it would be hard to disagree that the climate of Orlando, FL combined with the concrete bathtub is about as far removed from a natural habitat that these animals could be in short of keeping them on a tarp and spraying them with sprinklers. Seriously. It is fairly common knowledge in the scientific community that the whales enjoy much shorter lifespans than those achieved in the wild when the converse should be true with access to veterinary care. I'm okay with eating animals. I'm cool with zoos. If we're really being honest, it is fair to say that scientists and zoos have killed and/or significantly shortened the lifespans of MANY animals over the years. But, they learn and do better and it's usually only a few years before care in captivity is mastered. All we have learned from the keeping of Orcas in captivity is that it cannot be done. Many zoos have had to acknowledge that they do not have the space to humanely keep elephants. Our small local zoo no longer has those large animals as they acknowledge they don't have the space for them to be cared for appropriately.

    It is more than time for Sea World to acknowledge the same. If you can't keep an animal alive for longer in captivity than it's lifespan in the wild than you have no business keeping it at all. If you don't have the space to keep it in real family groups, you shouldn't keep it at all. And so on.

    I would love to visit a Sea World that doesn't have Orca's. I believe they do a decent job with most of their animal exhibits. Until the Orca's are gone, we won't be back.

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