Boy, did SeaWorld have a week it would like to forget.
Shares of SeaWorld Entertainment plunged 33% Wednesday after the company's earnings missed Wall Street expectations.It was almost funny, watching the stock analysts like Jim Cramer scratching their heads.
The Orlando, Fla.-based company also conceded for the first time that attendance at its theme parks has been hurt by negative publicity concerning accusations by animal-rights activists that SeaWorld mistreats killer whales.
"This is just an aberration. I've never seen a just, a complete collapse in EBITDA," Cramer said on "Squawk on the Street." "And they've got to do something. I don't know what they're going to do."
Cramer and his cohost both acknowledged what we call "The Blackfish Effect" -- the devastating power of Gabriella Cowperthwaite's documentary on orca captivity. "The documentary have to had played a big role," Cramer finally concluded.
Immediately SeaWorld responded with a PR move that had clearly been months in the making already -- it was going to expand the orcas' pools:
The company plans to upgrade the killer whale tanks at three of its theme parks, beginning with the San Diego location. The new enclosure in San Diego will be almost double the size of the current one, holding about 10 million gallons of water and extending to a depth of 50 feet. The company wouldn't specify the cost of the upgrades, only saying it would be several hundred million dollars.
And ooooh!!! They'll also add some new exercise equipment:
The San Diego facility will include a "water treadmill" system letting the whales swim against a stream of moving water, allowing them more exercise but also opening the door to new research into how the animals burn energy. The system will be the first of its kind in the world, the company says.
This is just plain old LAME. This just means these killer whales will have a larger acoustically sterile space to occupy.
These are the most acoustically sophisticated animals on the planet; their echiolocation, in the wild, is their primary sense. Sticking them in these pools is like putting a human in a plain white room. Making it larger doesn't help.
Naomi Rose, as usual, has the best insight:
Atchison and his execs also seem completely unaware of (or deliberately blind to) the fact that the plan to build larger tanks is a de facto admission that the current enclosures are inadequate. Saying otherwise makes the entire gesture insulting to anyone’s intelligence – it turns what could have been perceived as a better-late-than-never acknowledgment that they need to do better for these animals into a cynical waste of money. If the current enclosures are enough to allow the whales to thrive (as SW insists), then how can the company possibly justify the millions of dollars this expansion will cost, when it just admitted that 2014 has so far seen, and will continue to see, poor financial returns? On Wednesday SW said it would start a cost-cutting program to increase dividends for its shareholders and then on Friday it announced an extraordinarily expensive expansion program that will be paid for…how? How can this proposal possibly be justified except by an open, honest admission that Shamu Stadium is not adequate to safeguard the orcas’ welfare?
Rose has been saying all along that SeaWorld eventually is going to have to rethink its business model. It can't get away anymore with being a kid-friendly orca-circus theme park with a faux-educational front. It will need to become a genuine agent for conservation and education, and it will have to begin by rehabilitating its wild-born orcas and figuring out adequate living arrangements for its captive-born orcas. It will have to stop breeding. And it will need to assess its handling of all marine mammals, especially other dolphins.
These corporate folks always express reverence for the market and say they listen when it speaks. Well, the market is speaking loud and clear: SeaWorld's old way of making millions off the exploitation of animals unsuited to captivity are over.
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