Jack Doty – Every now and then, you wake up the morning after a bad first date and attempt to figure out what went wrong the night before. Sometimes, you just didn’t connect with the person. Maybe you got into a heated argument about football since you went to University of Georgia and your date went to University of Florida. Other times, the person was great but the date itself was the problem. In these situations, you tell yourself that a bad mini-golf outing was the reason you didn’t get a callback for round two. In 2013, SeaWorld didn’t go on a date with another theme park, but its corporate executives woke up one morning feeling like you and I do after a bad date. The cause was Blackfish, a documentary which examined the life of a performing killer whale who caused the deaths of several people while in captivity. Public sentiment towards SeaWorld took a turn for the worst, as the outcry over the whale’s captivity extended beyond animal rights groups. This public anger and the corresponding financial trouble SeaWorld faced following the film is known as the “BlackfishEffect.”
Flash forward five years to September 2018, when the Securities and Exchange Commission (SEC) filed a complaint against SeaWorld and its former CEO James Atchison. The SEC alleged that SeaWorld failed to disclose the impact of Blackfish to its investors in 2013 when it should have known that the documentary was harming the company’s reputation and business relationships. The SEC also claimed that SeaWorld, despite feeling the “Blackfish effect,” made misleading statements to the press about the Blackfish effect and did not disclose the Blackfish effect in registration statements filed with the SEC relating to an offering of shares. SeaWorld and Atchison reached a settlement with the SEC for $5 million.
Unfortunately for SeaWorld, the SEC was not the only party out for blood. Since 2013, SeaWorld has been involved in several lawsuits with animal activists, annual pass holders, and investors. Considering that SeaWorld’s profits, stock values, and attendance have plummeted during this time, few would have been surprised if the SEC’s lawsuit delivered the knockout punch. However, SeaWorld has surprisingly bounced bank. In 2018, the company reported an 8.6 percent increase in attendance and a net income of $44.8 million. The reported net income was a substantial turnaround from a $202.4 million loss in 2017.
SeaWorld’s rebound may just be a consequence of the growing global popularity of amusement parks. A report by AECOM indicated that worldwide attendance at the ten biggest operators of amusement parks increased 4% and crossed the half-billion visitors mark for the first time in 2018. The report attributed the growth in attendance to new attractions, such as Star Wars lands at Disney parks and the Wizarding World of Harry Potter at Universal Studios. For SeaWorld, the turnaround is said to be a product of new business strategies and attractions. In March 2018, SeaWorld announced that it would offer free beer and host cocktail parties during the summer. It also opened Sesame Street land and a new swing ride, tower slide, and water coaster.
Is SeaWorld’s journey out of the hole complete? Maybe. New pricing strategies, marketing initiatives, and attractions have certainly made SeaWorld’s resurgence possible. However, investors should be careful, as one good year does not guarantee a full recovery. Only stable attendance and repeated financial success in years to come will prove that the “Blackfish effect” is over.