Just when you thought that a reopening date for Walt Disney's (NYSE:DIS) original theme park would never land -- get it, Neverland? -- there's hope at last for California's Disneyland resort. A new bill under consideration in the state Assembly would allow larger theme parks and attractions to be treated the same way as their smaller rivals, and give them broader flexibility about getting back to business.
This doesn't mean that you and your kids will be lining up for Mr. Toad's Wild Ride or Soarin' Over California anytime soon. COVID-19 case counts will still have to improve dramatically from current levels to hit the tier within which parks owned by Disney, Six Flags (NYSE:SIX), Comcast (NASDAQ:CMCSA), Cedar Fair (NYSE:FUN), and SeaWorld Entertainment (NYSE:SEAS) in Southern California would be permitted to reopen under the new legislation. There will also be heavy restrictions in terms of park capacity and what guests will be able to do once they click through an entrance turnstile. However, even a little Disneyland can go a long way -- and for employees, theme park fans, and shareholders, it will have to do right now.
The encouraging news was enough to send shares of Cedar Fair, Six Flags, and SeaWorld 5% to 10% higher on Thursday. Disney and Comcast only inched up by 2%, but they are diversified media companies, and theme parks aren't their primary breadwinners these days.
A cautious pandemic strategy
Disneyland, Six Flags Magic Mountain, and Comcast's Universal Studios Hollywood have been closed for nearly 11 months. SeaWorld San Diego reopens on Saturday, but just as an accredited zoo -- visitors will only be able to enjoy its animal exhibits and select outdoor areas. That's a far different scene from the one in Florida, where Disney, Comcast, and SeaWorld have had their parks back in operation since June or July with far fewer restrictions than their California sites will face later this year.
While there's no way to know what the pandemic situation in California would have looked like had the state's government chosen a less strict approach, its abundance of caution when it comes to its theme parks doesn't appear to have paid off as hoped. During the country's autumn and winter coronavirus surge, COVID-19 cases per capita in California for some time spiked higher than Florida's levels. The Golden State's unemployment rate is now 290 basis points higher than Florida's, too. In Florida, it appears the companies were able to safely reopen their attractions, saving some jobs in the process.
In an ideal world, none of this will matter. If vaccination rates pick up, it could be just a matter of months before Disneyland and its smaller peers are firing up rides again in Southern California, regardless of what tier category they belong to. The new proposed bill can be a backup plan, but despite the companies' recently buoyant share prices, there is still a lot of work to be done.
The stock price of Six Flags hit a 52-week high on Thursday, and SeaWorld Entertainment is only one really good trading day away from achieving the same feat. Both companies are in fundamentally worse shape than they were a year ago, when it didn't seem as if the pandemic would be so brutal to their bottom lines. Cedar Fair largely sat 2020 out, and it's going to have a lot of work to do to lure customers back later this year. Disney canceled its annual-pass program last month, so it too will have to do some fence-mending with fans once it can start operating its parks at full capacity again.
California's parks may be moving one step closer to reopening, but there will be a lot of steps on the road back.