SEAWORLD COPES AMID PETA PRESSURE OVER ITS KILLER WHALES
At up to 32 feet and 22,000 pounds, a killer whale is no match for any individual — including the CEO of SeaWorld Entertainment.
The theme park company starts the year with a new interim CEO, David D’Alessandro, having just made a switch amid a continuing outcry from animalrights activists about maintaining killer whales, the parks’ biggest drawing cards, in captivity. The controversy, which the company blames for deterring potential showgoers mainly at its San Diego park, has taken its toll on earnings.
SeaWorld didn’t specify a reason in shuffling CEOs two weeks ago, but said its past CEO, Jim Atchison, will stay on as vice chairman of the board.
Even without a new permanent CEO in place, SeaWorld Entertainment, parent to three SeaWorld parks in the U.S. and eight other entertainment venues, has a plan to get itself out of its public-relations quagmire. It hopes that a new killer whale pen that’s twice the size of the existing one, its Blue World project, will help mollify critics and reassure guests. But the 10-million-gallon tank isn’t likely to be ready until 2018.
Until then, SeaWorld is emphasizing its care facilities for injured birds and marine mammals and spending $10 million “focused on threats to killer whales in the wild.” It is also cutting expenses by $50 million.
It’s not, however, doing as critics at People for the Ethical Treatment of Animals would like it to, by creating a coastal ocean sanctuary for its killer whales, or orcas, that would “protect orcas from the misery and harassment of captivity at SeaWorld,” as PETA said in a statement last month. Instead, PETA wants the company to create virtual-reality experiences with sea life rather than real-life encounters.
SeaWorld has offered whale shows for decades. What changed was a 2013 documentary, Blackfish, that received wide attention.
Blackfish was an indictment of SeaWorld’s practices, alleging that killer whales were abducted harshly from their natural environment and now live miserable lives cooped up in shallow pens. SeaWorld denies all allegations of any mistreatment and goes to great lengths on its website to show the care it gives its killer whales. The documentary won’t go away, now showing on television. (It was due to air on CNN just a week ago until it was preempted by coverage of the AirAsia crash.)
As a result, a California assemblyman introduced a bill into the state’s Legislature last year to ban
“There is no justification for the continued captive display of orcas for entertainment purposes.” California Assemblyman Richard Bloom
killer whales from California aquatic parks. “There is no justification for the continued captive display of orcas for entertainment purposes,” Assemblyman Richard Bloom, a Democrat from Santa Monica, said in a statement last April.
The bill died after a flurry of publicity that SeaWorld blames for some of its woes. PETA, however, has stayed active on the issue, buying stock in SeaWorld Entertainment to advance its whale cause from within. Last month, it said it submitted a resolution to its fellow shareholders calling on the company to develop the coastal sanctuaries as an old folks’ home for killer whales used in its shows. PETA used the management shake-up at SeaWorld to blast the departing CEO. “Jim Atchison’s watch has meant lawsuits, tanking stock, canceled performances by musical acts, falling ticket sales and continued depravation and isolation for orcas at SeaWorld,” said Delcianna Winders, PETA Foundation’s deputy general counsel.
SeaWorld declined to make its chairman and new interim CEO, D’Alessandro, available for an interview. Third-quarter earnings, released in November, weren’t good: Revenue fell by 8% to $495.8 million, and net income declined 28% to $87.2 million, compared with the same period a year ago. Atchison blamed negative publicity arising from the California orca bill as a cause, along with increased competition at its Orlando park.
He said SeaWorld would spend more on marketing, with a tailored message in different markets. For San Diego, he says, the focus would be on touting the company’s animal rescue efforts. SeaWorld also points out that with 86,000 animals to care for, it is one of the world’s largest zoological organizations. SeaWorld is also speeding up a share-repurchasing program to boost the stock.
With attendance of 8.4 million in the third quarter, down 500,000 from the same period a year ago, SeaWorld is looking overseas for growth — possibly in the Middle East and Asia.
Analysts were generally supportive of the CEO change. Felicia Hendrix and Amanda Bryant of Barclays Capital told investors the move reflects “the perceived need for change” with a search that focuses on outsiders.
“We view the change as a positive, opening the doors to operational changes and a new approach to the business from an outsider,” says Scott Hamann of KeyBanc Capital Markets.