SeaWorld Entertainment (NYSE: SEAS) has been getting a lot of press lately. Unfortunately, very little of it is good. Even with a million less visitors in 2014 than the year prior, the situation is far from hopeless. The company still logged 22 million guests across all of its parks. And despite a fourth quarter loss of over $25 million, SeaWorld was still able to post positive full-year earnings of $50 million, or $0.68 per share, according to data from S&P Capital IQ.
SEAS shares are down over 30% in the past year, but they have also gained about 16% year-to-date. Is it possible for SeaWorld and its new CEO to continue this positive momentum?
SeaWorld gets more bad press
Activists, mostly notably from PETA, have long been battling to shed light on what they claim is animal abuse at SeaWorld. However, the real catalyst for the controversy was the 2013 release of the documentary, BlackFish, which gained national attention.
BlackFish has been out for nearly two years now, but the recent release of Beneath the Surface, a book written by former senior orca trainer John Hargrove, is reigniting the debate. Hargrove is going public with his account of how "SeaWorld's wildly popular programs were both detrimental to the whales and ultimately unsafe for trainers."
The company's response is not working
In response to the public shaming that activists groups have put on SeaWorld, the company has tried a slew of advertising campaigns highlighting the good things the company does, such as the benefits of public education about marine animals and conservation efforts.
One of the more recent initiatives, started in March, was a twitter campaign called #AskSeaWorld, where the public could tweet questions regarding the company policy and practices. The company would tweet the answers for everyone to see. The company has posted some questions and answers on the site AskSeaWorld.com.
Unfortunately, these efforts backfired when activists took over the questioning and argued against the responses from SeaWorld. The company tweeted that activists "hijacked" the hashtag, calling them "bots and bullies" and saying that it was ruining the chance for the public to ask real questions and get real answers.
The need for change
I tweeted my #AskSeaWorld question to @Seaworld, but as of this writing (five days after my tweet), I have yet to receive a response.
Staying away from the activism side of the debate, is there any reason to believe SeaWorld stock can bounce back? As investors, any company we see facing major public relations issues, falling attendance, and weak earnings should take drastic steps to reverse the tide.
So as the ad campaigns and marketing fail to do the job, what is next? The likely answer would be to forego using animals in their entertainment, or at least diversify away from making that their core business.
Is that possible? Ringling Bros. and Barnum & Bailey thinks it is. The nearly century-old privately held circus company has responded to public discontent over the use of animals in its performances, and earlier this year, made public their decision to completely phase out the elephant act, with no elephants in any performance by 2018.
Can the new CEO turn things around?
Can SeaWorld take the same drastic action that Ringling Bros. took? According to Dennis Speigel, president of International Theme Park Services and industry expert, Seaworld needs a total "reconstitution of their parks" to have any chance at winning back guests and increasing sales. Yet, with a new CEO, that could be possible.
Joel Manby officially took the reins on April 7th. As the former CEO of Herschend Entertainment, a private entertainment conglomerate, Manby oversaw multiple theme parks, was featured on the TV show Undercover Boss in 2010, and even published a book called Love Works about the importance of managers implementing "servant leadership" in helping their employees and companies be successful. So far, Manby seems to have a very positive public image.
Manby has only a limited marine animal care background as Herschend did acquire two aquariums in 2007. Instead, his company focused on other forms of entertainment like unique theme parks, water parks, and even the Harlem Globetrotters which Herschend acquired in 2013.
With this new CEO and his diverse background in non-animal related entertainment, perhaps this is a good sign that SeaWorld will diversify away from using animals and offer new theme park attractions. If Manby successfully transitions the business, this could be an excellent long-term play for investors.
However, this recent share price momentum in 2015 might be a little premature. SeaWorld still has some major hurdles to face besides the PR nightmare, including industry high debt. Until we see that Manby is prepared to navigate SeaWorld past all of these hurdles, it might be best to stay off of this ship until there are more signs it will actually stay afloat.