Will SeaWorld survive?

Abraham Pizam, dean of the University of Central Florida’s Rosen College of Hospitality Management, spoke about the recent controversies plaguing SeaWorld and whether it can survive the current crisis. Read More

Following a disappointing second-quarter earnings report, SeaWorld Entertainment unveiled a plan to restore its public image by building larger killer whale environments at its three parks in San Diego, San Antonio and Orlando.

It was the company’s latest attempt to counter the onslaught of negative media attention paid to its treatment of killer whales, or orcas, following last year’s release of “Blackfish,” a documentary film, first aired on CNN, about the killer whale Tilikum, which in 2010 pulled SeaWorld trainer Dawn Brancheau to her death during a show. (SeaWorld responds to 'Blackfish' uproar.)

The film earlier this year became the basis for proposed legislation in California that would ban keeping orcas in captivity for the purpose of human entertainment.

Given the fierce competition SeaWorld faces from theme park heavyweights Walt Disney Co. and Universal, combined with negative images arising from the killer whale controversy, industry observers last week appeared to be at odds about what the future holds for the company, which admitted during its Q2 earnings call that it found itself in an increasingly defensive position.

“We continue to ramp up our communication initiatives through our Truth campaign and other national marketing efforts to build and protect our brands as well as to counter the recent media attention from the legislation proposed in California,” President and CEO Jim Atchison said during the company’s earnings call on Aug. 13.

The Truth campaign is SeaWorld’s name for its direct response to “Blackfish.”

SeaWorld Entertainment, formerly Busch Entertainment Corp., owns a total of 11 theme parks: two Busch Gardens, five water parks, an as-yet-unopened water park in Dubai and three SeaWorlds. It is majority-owned by the Blackstone Group.

SeaWorld’s attendance for the second quarter dropped 0.3%, to 6.6 million, and revenue fell to $405.2 million, from $411.3 million in 2013. The company’s board authorized a $250 million share repurchase program effective Jan. 1.
SeaWorld - Blue World rendering
SeaWorld updated its guidance for 2014, stating that it expected full-year revenue to be 6% to 7% lower than previous forecasts and adjusted earnings before interest, depreciation, taxes and amortization (EBITDA) to be down between 14% and 16%.

Five days after the earnings report, the company unveiled its Blue World Project, which encompasses new killer whale environments and a pledge to provide $10 million in matching funds for killer whale research and conservation projects.

“Our vision for our new killer whale homes and research initiatives is to advance global understanding of these animals, to educate and to inspire conservation efforts to protect killer whales in the wild,” Atchison said in a statement about the new project.

SeaWorld San Diego will be the site of the first new orca environment, with construction slated to start in 2015 and an opening scheduled for 2018. The environment will provide a maximum depth of 50 feet, a surface area of 1.5 acres and a length of 350 feet.

“Guests will be able to walk alongside the whales as if they were at the beach, watch them interact at ocean depths or from a bird’s-eye viewing gallery nearly four stories high,” Atchison said.

Those measures, however, did little if anything to quell the protests from animal rights activists.

People for the Ethical Treatment of Animals (PETA), which has launched one of the most vocal anti-SeaWorld campaigns, said last week that the Blue World Project amounted to too little, too late.

Lindsay Rajt, PETA’s associate director of campaigns, said, “If SeaWorld wants to improve its image, it should allow the orcas to be released into the ocean. Expanding these tanks really is not helpful.”

Last week, the company dropped its court appeal of citations it received after Brancheau’s death, ending any chance that trainers will ever again swim with orcas during shows, the Associated Press reported.

The news followed last month’s announcement that Southwest Airlines and SeaWorld had mutually agreed not to renew their 25-year-old marketing partnership, which expires at the end of the year. And a new Change.org petition has targeted American Express for its sponsorship relationship with SeaWorld.

Despite the onslaught of bad publicity, even PETA thinks there is hope for SeaWorld.

“SeaWorld doesn’t need to shut down,” Rajt said. “If they were smart, they would make the announcement that they were releasing the captive orcas to ocean sanctuaries. And I think they would still have a very unique offering.”

But industry analysts said the solution to the problems faced by SeaWorld isn’t as simple as just freeing the orcas.

“There is no such thing as a romantic, ‘Free Willy’ ending here,” said Rick West, founder and editor in chief of fan site Theme Park Adventure. “You cannot just release orcas into the wild and say, ‘Be free!’ They don’t know how to survive in the wild, and their bodies aren’t equipped to handle ocean water.”

(West’s reference was to the 1993 movie “Free Willy,” a fictional account in which a young boy risks everything to free a killer whale that was to be euthanized by an aquarium.)

West said a more favorable and realistic scenario would be to allow SeaWorld’s current population of killer whales to live out their days (which could actually mean decades) in the best environments possible, such as the new Blue Water tanks. In the meantime, it could shift the parks’ programming to observe-only when it comes to the orcas, shifting the emphasis from entertainment to education.

Killer whale at SeaWorld“SeaWorld can still thrive and be a leader in oceanographic research and education, while offering world-class attractions and, yes, stunning aquarium environments to guests, without killer whales performing learned behaviors in stadium shows,” he said.

A question is whether the company can afford to overhaul both the parks’ entertainment theme and its business model at a time when it is already financially strained.

West estimated that the three new orca habitats, combined with the money for research, could cost SeaWorld up to $1 billion just to “get an upper hand in this situation. That’s a lot of money, and there’s not even a guarantee that it will alter the momentum that ‘Blackfish’ appears to have.”

He added that if SeaWorld’s numbers continue to fall, “I don’t know that we will see the Blue World Project through to completion.”

Indeed, a strong interplay between doubt and optimism seemed to color many of the observations made last week regarding SeaWorld.
Robert Niles, editor of ThemeParkInsider.com, observed, “SeaWorld’s in a tough spot, offering nonfiction-driven parks at a time when leading competitors are moving more toward fictional franchises, such as Harry Potter or the Disney Princesses.”

Even so, Niles said, “Millions of people love animals, and millions of people would rather share a moment with a real exotic animal than with a person in a cartoon-character costume. So SeaWorld’s still got a potential market here.”

Senior editor Gay Nagle Myers contributed to this report. 

Photo of killer whale courtesy of Shutterstock.com 


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