SeaWorld Straddles Blackstone and Blackfish

SeaWorld's investor takes another step back.

Mar 24, 2014 at 11:12AM

Source: SeaWorld Entertainment.

SeaWorld Entertainment (NYSE:SEAS) is starting to show signs of getting over last year's scorching Blackfish documentary, but now it needs to deal with Blackstone. The private equity firm filed to sell another 15 million shares of the marine life theme park operator this morning.

Blackstone acquired SeaWorld during the economic downturn in a $2.3 billion deal five years ago. It took a little off the table when it took SeaWorld public 11 months ago, and then it went on to sell another 18 million shares in a secondary offering late last year.

SeaWorld tried to generate warm fuzzies on Friday by hosting a media event at its parks commemorating the fact that its original park in San Diego opened 50 years ago. SeaWorld's new 50th Celebration follows a "Sea of Surprises" theme that will reward guests with prizes and more unique animal interaction experiences. Taking a page out of Disney's annual milestones where the festivities often stretch beyond a dozen months, the Sea of Surprises will milk the anniversary for the next 18 months at its SeaWorld parks in San Diego, Orlando, and San Antonio.

The "Sea of Surprises" comes at a time when the park operator could use a big splash. Unlike Disney and Comcast's Universal, entertaining record crowds at its Florida theme parks, attendance slipped by 4.1% to 23.4 million guests across SeaWorld's properties last year. Attention garnered by Blackfish on the dangers of having killer whales in captivity has left its mark, even if the park has responded by countering many of the claims made in the documentary. SeaWorld seems to shrug off the concerns. Blackfish didn't come up at all during last month's earnings release and subsequent conference call. However, it's probably telling that SeaWorld isn't raising prices right away. Disney World and Universal Orlando boosted their one-day admissions last month, a move that it typically aped by the rest of the industry in Central Florida. SeaWorld only says that its nearby SeaWorld Orlando and Busch Gardens Tampa parks will consider increases closer to the key summer season.  

Perhaps the biggest surprise in this sea is that SeaWorld shares have actually been trending higher through the calamity. Blackstone took it public at $27 last April, unloaded 18 million shares at $30 in December, and the stock is trading even higher now despite dropping on the Blackstone news to open at $32.35 this morning. The challenge remains getting the turnstiles clicking, even though revenue per guest increasing has more than offset the dip in attendance. 

It may not be fair to read too much into Blackstone's third sale of SeaWorld shares over the past year. It's an investor. It moves on to new things. However, SeaWorld had better hope that this "Sea of Surprises" results in a needed spike in traffic. If not, the next surprise won't be a welcome one to its investors.

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4 in 5 Americans Are Ignoring Buffett's Warning

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Jun 12, 2015 at 5:01PM

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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