It's been a busy week for SeaWorld Entertainment (NYSE:SEAS), and not just because the chain's marine parks are likely busier than usual given the seasonal nature of spring break holidays.
A new CEO took over on Tuesday, and a new television commercial designed to let SeaWorld tell its side of the Blackfish story rolled out earlier in the week.
SeaWorld needs to shake things up. It's coming off of back-to-back years of attendance declines at a time when the rest of the industry is basking in the glow of an improving economy and cheap gas. There's a negative perception when it comes to the SeaWorld brand, and that's not going to change if it doesn't stand still. Bringing in a new CEO -- and an outsider at that -- can help. The new marketing campaign, aiming to clear up some of the misconceptions raised in Blackfish, will also help as long as it doesn't pick at old scabs and infuriate activists even more.
Making a big splash
We've known since last month that Joel Manby would be taking the helm at SeaWorld on Tuesday. He left his post as CEO of the successful privately held Herschend Enterprises, trading in the theme park stability of Dollywood, Silver Dollar City, and other attractions for the challenge of turning SeaWorld around.
Manby is an intriguing choice. He's been on Undercover Boss, and given his strong Christian roots he's as comfortable speaking on CNBC as he is on 700 Club. He even wrote a popular business book -- Love Works. -- that encourages business executives to lead with love in creating a positive corporate culture. It will certainly be a rough transition as he goes from the beloved parent company of Dollywood -- voted the friendliest theme park in the country last year in the annual Golden Ticket Awards -- to a place where picketers often stand at SeaWorld entrances in an effort to sway park guests to head elsewhere.
Then again, Manby is probably exactly what SeaWorld needs. Only an outsider could truly rattle the cage, and shaking things up could find the company in one of two extremes: SeaWorld will either appease the activists or fight back until consumers are ready to move on.
SeaWorld is already addressing one of the biggest knocks by improving the killer whale tanks. The park will soon break ground in San Diego on a much larger environment for its killer whales with high-tech play features. It will then follow suit at its two other namesake parks in Texas and Florida. However, activists aren't in the mood for a compromise. They won't be satisfied until SeaWorld releases all of its orcas, and if there is any chance that the theme park operator goes this route it may as well think about it before it invests in lavish tanks. There's always a chance that these interactive environments can substitute the signature shows, but if activists will be complaining even under that scenario what's the point?
The other strategy -- and that's where this week's ad is going -- is to try to reshape the conversation through marketing. The new 30-second ad takes some of the issues raised by Blackfish head on. It points out that SeaWorld hasn't captured whales in the wild in more than 35 years. One of the more graphic scenes in Blackfish involves old footage of boats capturing whales. Another claim raised in Blackfish is that orcas in captivity have shorter life spans than those in the wild. SeaWorld refutes the claim with government research.
The ad isn't likely to be overly persuasive. Where you stand on orcas in captivity is probably a lot like religion or politics. You stand where you stand, and passionately so. Even if this ends in the mother of all debates with Blackfish and SeaWorld going back and forth, opinions are fairly cemented at this point. All that SeaWorld can do at this point is line up allies (wake up, local zoos, you're next), or reformulate its theme parks so they continue to be thrilling to guests but without the heavy reliance on performing marine life.
Even a little bit of a turnaround can go a long way. Net income has plunged 33% over the past two years, according to S&P Capital IQ data, even though revenue has only declined 3% in that time. If Manby can get SeaWorld to enjoy the favorable tailwinds that cheap gas and an improving economy should provide to summer tourist attractions -- and reshaping public opinion is vital to making that happen -- one of the more disappointing IPOs of 2013 can learn to splash again.