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Does SeaWorld Entertainment Inc. Have a Future Without Orcas?

By Motley Fool Staff – Mar 25, 2016 at 8:14PM

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The theme park's stock popped after it said it was ending its orca-breeding program. But while this may help defuse its PR problems, it also means it's draining its competitive moat.

SeaWorld Entertainment's (SEAS 2.94%) stock saw a 14% bump after the company announced plans to phase out its highly controversial orca breeding program, and saying those currently in its care will be the last generation to perform.

In this segment from the Motley Fool Money podcast, Chris Hill, Matt Argersinger, Jason Moser, Simon Erickson, and Steve Broido talk about the uncomfortable fact that as ethical as the move may be, it removes SeaWorld's most defining feature from the picture. Without those massive marine mammals, what does SeaWorld have left to differentiate itself from the competition?

A full transcript follows the video.

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This podcast was recorded on March 18, 2016. 

Chris Hill: Shares of SeaWorld Entertainment up 14% this week after the company announced it will phase out its orca breeding program. This seems like a very humane thing to do, but, I don't know guys. If SeaWorld does not have the [orcas] ... for as long as I can remember, the whole brand identity of SeaWorld was the killer whale logo, the show, all that sort of thing. If they don't have that, what are they?

Matt Argersinger: Yeah, we talked before the show -- SeaWorld, essentially, now is an aquarium.

Hill: It's an aquarium.

Argersinger: And there's plenty of great aquariums on the East Coast or around the country to go to. Yeah, I agree. In a way, I think all of us kind of look at this and say, "Yeah, this is the right thing to do, this is the humane thing to do." But, just putting on my cold-hearted business hat, this can't be good for SeaWorld long term. This was the major draw. And I don't know what gets people back to SeaWorld.

Jason Moser: I think you just change it over, now you have a clownfish and it's called NemoWorld. I mean, that's a no-brainer. You're probably bringing in a whole new demographic while you're at it.

Simon Erickson: I'm going with piranhas and deadly jellyfish. 

Hill: Wow!

Erickson: Preserving the fear that we had from the sharks.

Moser: Man-of-War world.

Hill: Nice, nice. You know, the first indication I had that SeaWorld was in trouble was from our man behind the glass, Steve Broido, who saw the documentary, it was called Blackfish, wasn't it, Steve?

Steve Broido: It was. And not only did I see it, but I sent a very nasty letter to SeaWorld saying, "I am never going to SeaWorld. You guys are terrible, and this is a horrible, horrible business."

Hill: Any advice for them on what they can do to rebrand?

Broido: I think they can call it CoralWorld.

Hill: (laughs) Go for the color scheme?

Broido: Go for the color scheme.

Hill: Nice.

Jason Moser has no position in any stocks mentioned. Matthew Argersinger has no position in any stocks mentioned. Chris Hill has no position in any stocks mentioned. Simon Erickson has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. We Fools may not 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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