At First, Firm Only Had Eyes for Whales : A Growing Harcourt Ended Up Buying Marineland, Only to Close It
The new owners of Marineland--who announced on Wednesday that that was the park’s last day--were initially interested only in purchasing the park’s two killer whales, Corky and Orky, a corporate official said this week.
Harcourt Brace Jovanovich, which operates three Sea World parks, wanted the mammoth marine mammals because its efforts to obtain federal approval to capture more whales have been blocked, said Bruce Starling, a senior vice president. The whales, also known as orcas, are the star attractions at the Sea World parks, and Sea World wanted to add the Marineland whales to its breeding program.
Last September, Harcourt contacted Warwick International, a Hong Kong company that owned Marineland, to inquire about purchasing the whales but was rebuffed, Starling said in a telephone interview.
Harcourt then began negotiations to buy the entire park, he said.
The disclosure came after much speculation by officials in Rancho Palos Verdes, who have wondered aloud about Harcourt’s motives and plans. After it was announced that Marineland had been sold to Harcourt, the Fortune 500 company angered city officials and animal lovers by issuing a series of contradictory statements over what it intended to do with the facility.
Harcourt said this week that it still does not know what it will do with the Marineland site, but the purchase comes at a time when the company is showing renewed interest in its main activity, book publishing, even as it enters a new field, real estate.
Shortly after the Marineland purchase, William Jovanovich, Harcourt’s chief executive, said the park would not be closed and no animals would be moved to Sea World parks. Then, on Jan. 20, the company moved Orky and Corky to the Sea World in San Diego, during the night and without any public notice, but said Marineland would remain open with a pilot whale show.
On Jan. 29, the company said it was shutting down Marineland effective March 1, but announced Wednesday that yesterday was the park’s last day.
“They seemed to say one thing and do something else,” Rancho Palos Verdes City Manager Dennis McDuffie said in an interview.
In recent days, Harcourt--unusual among companies its size in that it has no investor-relations department or corporate public relations personnel--has attempted to soothe City Hall tempers by staying in touch with the city as it moved ahead with plans to close the park and transfer the animals to its other aquatic parks.
The company has also pledged to assist the park’s 300 workers in finding new jobs, either within its own organization or elsewhere.
“Candidly, we have not begun our relationship with this community on the best foot,” James Harris, a vice president with Harcourt’s land company, told city officials at a council meeting last week. “But we will work together in the future.”
Harcourt’s purchase of Marineland comes at a time when the longtime book publisher has been expanding rapidly by “growing in three directions”--publishing, theme parks and insurance, according to Bert L. Boksen, an analyst who follows Harcourt for Raymond James & Associates, a brokerage firm based in St. Petersburg, Fla.
The firm, which Boksen characterized as “bottom-line oriented,” is run by the 67-year-old Jovanovich, a miner’s son who joined the company as a textbook salesman in 1947 and has been its chief executive for the last 32 years. The feisty Jovanovich divides his time between the company’s Orlando headquarters and its offices in San Diego, where he has a home.
It has been Jovanovich who has led Harcourt’s aggressive charge into the theme park business, starting in 1977 with the purchase of the Sea World parks in San Diego, Orlando and Aurora, Ohio. A fourth Sea World is under construction in San Antonio at a cost of $140 million and is scheduled to open in spring, 1988, according to Starling.
Additionally, the company, which moved its headquarters in 1981 from New York to Orlando, bought three more Central Florida theme parks for more than $44 million. Those parks, purchased between 1984 and 1986, include Stars Hall of Fame, Cypress Gardens and Circus World.
The company’s move into the theme park business has paid off. In 1985, the parks represented 17% of the company’s revenue and 31% of its profit. Overall, the company’s profits have increased from $38.6 million in 1982 to $108.9 million in 1985.
Harcourt’s success with theme parks had led some company observers and analysts to believe the company was moving away from its roots, publishing. But last October, the company, which over the years has published the works of such authors as Carl Sandburg and T. S. Eliot, purchased CBS Inc.’s book publishing operations for $500 million.
Will Boost Revenues
That purchase, which is expected to make Harcourt the largest U.S. publisher of elementary and high school textbooks, will boost the company’s revenues this year to somewhere in the neighborhood of $1.6 billion, Starling said.
Starling added that book publishing is expected to account for 60% to 70% of Harcourt’s revenues in the near future. The company “doesn’t have any desire right now” to acquire more theme parks, he said.
But last June, Harcourt formed its own real estate business, HBJ Land Co., which owns at least $200 million worth of undeveloped acreage in Florida and Texas.
Negotiations to buy Marineland began immediately after the whale purchase was rejected, Starling said. There was a “little hiatus” in the talks when Harcourt moved to acquire CBS Inc.’s book publishing operations, he said, but Harcourt signed an agreement to purchase the park on Christmas Eve and completed the contract six days later.
Starling conceded that the company wanted to acquire Corky and Orky because of the trouble Sea World has encountered in its efforts to obtain a federal permit to capture 10 of the whales in Alaska for breeding and display at its parks.
Permit Blocked
In 1983, a federal court blocked the issuance of the permit by the National Marine Fisheries Service after strong opposition was voiced by state and environmentalist groups. The court ruled that the federal agency should study what impact removing the whales would have on the environment, or determine why such a study was not needed.
The fisheries service appealed the ruling last year and lost. Robert Brumsted, chief of the division of protected species for the fisheries service, said this week that the agency has not determined what its next move will be. The agency fears that the ruling could set a precedent that would hamper any effort to capture marine mammals.
Starling said that although the killer whales were the main reason the company initially wanted to buy the park, the company was interested in its other animals, too.
Starling and other company officials said Harcourt decided to close the park after it had had an opportunity to inspect its premises closely, which it said it was not able to do before the contract was signed.
He insisted that the company did not initially intend to close the park, even though Harcourt acknowledged that Marineland had been losing money for many years, and did not realize until after the purchase that $25 million in improvements would be needed to make it profitable.
Officials Not Available
Officials at Warwick, a privately held company, could not be reached for comment.
Harris, the Harcourt vice president associated with its land company, said that since the company announced it was closing the park, it has had inquiries from California developers about buying the 100 or so prime, oceanfront acres that the park sits on. The land is zoned commercial-recreational, which would prohibit a residential development.
However, Harris said the company has no plans to sell the property. Nor does it have any plans to develop the property itself.
“Obviously, it is a beautiful piece of property, but we have no plans for a specific development . . . ,” he said. “We need to hold discussions in coming months with city officials and others on what could possibly be done with the property.”
Said Ken Noble, first vice president of the Paine Webber brokerage in New York: “I have not known them to buy land for land’s sake. If they don’t do anything with Marineland but sell the land, it would be a first for them.”
HARCOURT BRACE JOVANOVICH Revenue Millions of dollars
1983 1984 1985 1986 635 713 819 *1,300
* Valueline Estimate Net Income Millions of dollars
1983 1984 1985 1986 27 34 51 *72
* Valueline Estimate Breakdown by Division Pretax income in percent 1986 not available.
1984 1985 HBJ, Publishers 39.9 31.2 Sea World Enterprises 25.9 28.0 HBJ Communications 29.4 24.1 HBJ Insurance 4.8 16.7
Recent Acquisition: CBS Inc. book publishing operation.
