Former SeaWorld President JIm Atchinson speaking about death of an orca trainer. Photo / Getty Images
Former SeaWorld President JIm Atchinson speaking about death of an orca trainer. Photo / Getty Images
Two years into his effort to turn around SeaWorld, chief executive officer Joel Manby is losing the support of investors.
SeaWorld shares fell more than 8 per cent last month and are down almost 19 per cent since Manby came in to fix the company. The number of investors betting the stock will fall stands at a record 23.5 million shares, or more than a third of those available for trading.
Also telling: investors voted last month to oust Chairman David D'Alessandro and reject the company's pay plan.
The actions underscore the high degree of investor scepticism surrounding SeaWorld's efforts to bounce back from a devastating 2013 documentary that criticized the company's treatment of captive killer whales and damaged the theme-park owner's standing with parents who take their children to see its orca and dolphin shows.
"Investors have grown impatient with the pace of the company's turnaround story and, more importantly, the languishing share price," Steven Wieczynski, an analyst with Stifel Nicolaus & Co, wrote in a note after the June 14 annual meeting.
He recommends buying the stock, saying he believes Manby's turnaround plan will pay off.
Manby, who previously ran the parent of the Dollywood theme park in Tennessee, has made changes at the company, which owns 12 theme parks across the US, including its namesake resorts in Florida, Texas and California.
Responding to criticism from animal activists that killer whales shouldn't be kept in captivity, he ended SeaWorld's orca breeding program and introduced a new show at its San Diego park that features the creatures performing more natural behaviours.
Manby declined a request for an interview, citing quarterly results due out in coming weeks.
At SeaWorld's annual meeting, a virtual one in which board members dialled in and management chose what emailed questions to answer, Manby said the company introduced seven new shows and attractions this year, up from three in 2016.
They're part of an effort to reduce the SeaWorld's dependence on live animal shows. While it's too early to say whether new rides are boosting attendance, customer feedback on attractions such as the Orca Encounter has been positive, Manby said.
In March, SeaWorld announced a partnership with Chinese developer and tour operator Zhonghong Group to open parks in Asia. Zhonghong acquired 21 per cent of SeaWorld, becoming the largest shareholder after buying out the stake held by Blackstone Group, the private-equity firm that took the company private in 2009 and then public in 2013.
SeaWorld chief executive Joel Manby. Photo / Getty Images
SeaWorld has also announced a licensing agreement for a park in Abu Dhabi and an expanded relationship with Sesame Workshop that would let the company develop attractions around the beloved children's TV show. A second Sesame Place park is slated to open by 2021 and a new Sesame Street land is planned for Orlando in 2022.
"I'm enthused about our attractions and rides, and hopefully this will continue to improve the momentum for the SeaWorld turnaround," Manby told investors.
Still, problems keep popping up. Leading up to the annual meeting, proxy adviser Glass Lewis & Co. urged investors to reject Chairman D'Alessandro after he received a partial payout from an incentive plan even though the stock hadn't delivered the targeted return. The company said on June 23 that D'Alessandro will step down in December.
The same day, SeaWorld said the US Justice Department and Securities and Exchange Commission were investigating prior management's public statements regarding the impact of "Blackfish," the 2013 documentary critical of the company's orca care.
Investors have grown impatient with the pace of the company's turnaround story and, importantly, the languishing share price.
SeaWorld said at the time that the film wasn't hurting attendance and instead cited weather, higher ticket prices and calendar changes for fewer visitors. In August 2014, management acknowledged for the first time that the controversy was crimping ticket sales. The company said it's cooperating with the investigation.
The pressure on Manby is likely to grow. Hill Path Capital, an investment firm founded by former Apollo Global Management partner Scott Ross, has increased its holding to 13 per cent. The New York-based firm said it will continue to hold talks with management about the company's performance, according to a regulatory filing. Ross declined to comment.
With the big summer quarter under way, the next few months will be critical to see if Manby's investments draw crowds, according to FBR & Co analyst Barton Crockett. Walt Disney and Comcast's Universal Studios have also introduced major new attractions that will compete with SeaWorld in Florida and Southern California.
SeaWorld was recently offering tickets online at US$60 for weekdays and US$75 on weekends at its San Diego park, a discount from the regular price of US$95. Disneyland and Legoland, both nearby, were charging US$110 and US$98, respectively.
