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Amid 'Blackfish' controversy, SeaWorld beats on earnings

The Exchange
A state lawmaker introduces a legislation that would ban SeaWorld from using orcas in its San Diego shows.

Seaworld (SEAS) on Thursday reported fourth quarter 2013 earnings that beat analyst expectations, noting a loss of 13 cents a share and revenue of $272 million versus analyst estimates of a 15-cent loss and revenue of $271.42 million. Looking ahead, the company sees fiscal year 2014 revenue of $1.49 billion to $1.52 billion, versus a consensus of $1.53 billion.

The Orlando-based SeaWorld, which has 11 parks total and three SeaWorld locations, has been the subject of much controversy since the 2013 release of the documentary “Blackfish,” which claims to tell the true – and deeply unsettling – story behind the company’s practices regarding captive orcas, often referred to as killer whales. The film, which reached a wide audience when CNN broadcast it last October, is highly critical of SeaWorld and its treatment of both its animals and employees. In particular, it focuses on the ill-famed orca Tilikum, who was tied to the deaths of three people, most recently in 2010 when trainer Dawn Brancheau was killed in front of a horrified crowd of SeaWorld attendees.

In the wake of the highly publicized film, legislation has been introduced in New York and, just last week, in California (where SeaWorld has a San Diego park), proposing a ban on keeping orcas in captivity.  The California bill, if it became law, would end any captivity of orcas for the purpose of entertainment, and effectively retire all 10 animals currently held by SeaWord San Diego. It would also prohibit breeding of the captive whales.

Since assemblyman Richard Bloom (D-Santa Monica) proposed the Orca Welfare and Safety Act on March 7, SeaWorld shares have suffered. At Thursday's close, they were down more than 4% on the week, to $31.51. The company has been public since April of last year, when it raised more than $700 million, three years after it was acquired by private-equity firm Blackstone (BX). Shares jumped 24% from the offer price of $27 on its first day of trading, but the stock price is now below the $33.52 close of its debut session.   

'Blackfish' rage

Recently appointed SeaWorld youth ambassador Bindi Irwin has been the latest target of “Blackfish”-inspired rage, with social media missives imploring her to watch the documentary and not sully her father’s name by associating with the company. Bindi is the daughter of the late Steve Irwin, otherwise known as the Crocodile Hunter, who was killed on the job by a stingray in 2006.   

SeaWorld did not respond to a request for comment from Yahoo Finance, and the company hasn't yet made a public comment on Bloom’s proposed legislation. However, the company has been quite vocal in its response to “Blackfish” and, back in January, noted that, despite the controversy, the fourth quarter of 2013 saw record park attendance after an earlier slump.

Recently, Breakout’s Jeff Macke questioned SeaWorld’s public reaction to the documentary, saying it might take a page from Disney’s (DIS) PR book and decide that, when dealing with debates that could hurt its bottom line, silence truly is golden.

SeaWorld’s arguments against the film are laid out on its “Truth About Blackfish” website. “The film conveys falsehoods, manipulates viewers emotionally, and relies on questionable filmmaking techniques to create ‘facts’ that support its point of view,” the site states. It also says SeaWorld does not currently collect killer whales from the wild, that employees interviewed in the film had little to no experience with killer whales, the circumstances around Brancheau’s death were misstated and the film relied heavily “on animal rights activists masquerading as scientists.”

Opponents as investors

Around the time of the IPO, Yahoo Finance spoke to one of the more-prominent animal-rights organizations, PETA (People for the Ethical Treatment of Animals) which revealed it had purchased 80 shares of the stock, enough to ensure the group could submit shareholder resolutions that could be voted on by other investors.

We caught up with PETA before Thursday’s earnings, speaking with Jared Goodman, the organization’s director of animal law. Since last year, PETA has retained its original 80 shares, purchased at $28.42 each. PETA submitted its first shareholder resolution in January of this year, calling for SeaWorld to develop coastal sanctuaries where orcas could be released and retired.

According to Goodman, SeaWorld then invoked the SEC rule stating a company must include a shareholder’s proposal in its proxy statement only when the shareholder has held the stock for at least a year. SeaWorld’s proxy statement will be published on April 17, only two days shy of the one-year anniversary of PETA’s SeaWorld stock purchase.   

Goodman says PETA feels encouraged by the increased awareness of what he calls “abusement parks” following the wide release of “Blackfish” and the Orca Welfare and Safety Act proposal.

“People are more aware than ever that SeaWorld's artificial tanks are detrimental to sensitive, complex animals such as orcas,” he says. “SeaWorld has an opportunity to improve the company's reputation and preserve its future by making the progressive decision to stop imprisoning these intelligent, large-bodied animals in tanks that are, to them, the size of a bathtub.”

It remains to be seen if any significant changes will come about at SeaWorld as a result of "Blackfish" or any new laws passed on the behalf of orcas. For its part, Seaworld not only points to the alleged inaccuracies in the film but also touts its animal rescue program, which it claims has helped rehabilitate and reacclimate more than 22,000 sick, injured and orphaned marine animals over four decades.