How SeaWorld Is Surfing to Profitability Above the 'Blackfish' Scandal

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Killer whales performing tricks at marine theme parks
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Protestors and contract-shredding musical acts haven't been enough to slow the turnstile clicks at SeaWorld Entertainment (SEAS). The controversial operator of marine-life parks revealed on Monday that it enjoyed a wave of record attendance levels at its three namesake destinations.

SeaWorld also announced that it raked in a record $1.46 billion in revenue for all of 2013, implying that revenue for the fourth and final quarter rose 3 percent to $271.7 million. It's not spectacular growth, but it's certainly a lot better than what worrywarts were fearing as the scathing documentary "Blackfish" began to nibble at SeaWorld's reputation.

Record attendance? Record revenue? Could the notoriety behind the widely watched documentary actually be helping SeaWorld?

Killer Buzz and Band Protests

"Blackfish" details the dangers and cruelty of containing killer whales in small habitats, and highlights the accidents that have resulted in at least a couple of fatalities, including the horrific death of trainer Dawn Brancheau during a 2009 show at SeaWorld Orlando.

The documentary didn't generate a lot of buzz during this past summer's theatrical run, but then CNN -- a producer of the film -- began airing it on its news channel in October. Now it's out on DVD -- but it's spreading an even wider net because it's also available on Netflix (NFLX) with its more than 40 million global subscribers.

SeaWorld initially tried to ignore the film, but it had little choice but to go on the offensive when A-list musicians -- pressured by fans who had seen it -- began canceling performances for its upcoming Bands, Brew, & BBQ concert series. Cheap Trick, Barenaked Ladies, and Trace Adkins are among the many performers who have nixed appearances.

SeaWorld took out full-page ads in several newspapers to refute many of the claims made in the documentary. One of the trainers interviewed for "Blackfish" recently spoke out about the mischaracterizations made by the film's producers.

However, all of the debate has likely drawn even more attention to the movie, which is now just a Netflix stream away for millions of potential viewers who won't bother to search for opposing perspectives after investing 90 minutes in watching the film.

Beneath the Surface of Those Stellar Numbers

There's likely more to the record attendance than the data points that SeaWorld is offering up at the moment.

Yes, revenue rose 3 percent during the seasonally potent third quarter. However, what's interesting about that gain is that it occurred despite a 3.6 percent decline in attendance, thanks to a 9.1 percent increase in admission price per capita and a 3.5 percent spike in in-park spending per capita.

In other words, the average guest paid more to get into the park and spent more on food and merchandise while there during the third quarter.

The numbers can't add up that way this time around. If revenue grew by a similar amount in the fourth quarter and attendance was positive, it means that admissions are being discounted or that guests aren't spending at quite the levels that they were earlier in the year.

SeaWorld did offer a Groupon last month for its Orlando park. Central Florida attractions often turn to the daily deals leader to drum up traffic, but it's largely a technique used by miniature golf courses and go-kart tracks. Groupon's (GRPN) not a company the major theme park operators typically turn to in order to boost attendance.

SeaWorld is sticking to its earlier adjusted EBITDA guidance, so the discounting hasn't been catastrophic. However, for a theme park operator that seems to practically be taunting protestors with show names including The Call of the Ocean, Blue Horizons, and One Ocean, getting the turnstiles to click in the right direction is an incomplete story until we learn more about how the quarter actually played out in a few weeks.



Motley Fool contributor Rick Munarriz owns shares of Netflix. The Motley Fool recommends Netflix. The Motley Fool owns shares of Netflix. You can try any of our newsletter services free for 30 days.

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