Six Flags Auction May Shake Up Southland’s Theme Park Sector
Debt-ridden amusement park company Six Flags Inc. put itself up for sale Thursday, raising the prospect of a shake-up in the Southern California theme park industry.
Six Flags owns thrill-ride mecca Magic Mountain in Valencia and neighboring water park Hurricane Harbor. Those properties could be attractive to Sandusky, Ohio-based Cedar Fair, which owns Knott’s Berry Farm and three Soak City water parks in Southern California, a person familiar with the company’s thinking said.
The Valencia venues would be of interest to Cedar Fair because it would present marketing opportunities with its local water parks and Knott’s, this person said. Cedar Fair would be unlikely to acquire all of the Six Flags properties because of the Oklahoma City company’s debt load -- more than $2 billion as of June 30.
Six Flags is also much larger, with 30 parks, compared with Cedar Fair’s 12.
There is precedent for a limited acquisition. Last year, Cedar Fair paid $145 million for Six Flags of Ohio, located a few hours from Cedar Fair’s flagship Cedar Point park in Sandusky.
With more properties in Southern California, Cedar Fair would be able to use media buys to advertise all the parks simultaneously, said Carl Winston, director of San Diego State University’s Hospitality and Tourism Management Program.
“In the last five years Cedar Fair has gotten three local water parks -- in Buena Park, San Dimas and San Diego,” Winston noted. “Now they market them all on the radio as Knott’s Soak City.... It’s a lot more cost effective than a one-off park.”
He also noted that Magic Mountain and Knott’s both emphasize gravity-defying rides.
“It would make a lot of sense from Cedar Fair’s point of view,” he said. “It’s a good cultural fit -- they have experience in dealing with the young adult market.”
Six Flags declined to discuss a possible sale of its Southern California properties.
The company put itself up for sale one week after Dan Snyder, owner of the NFL’s Washington Redskins, filed papers stating his intention to take control of Six Flags and install Mark Shapiro, an executive at Walt Disney Co.’s ESPN, as chief executive.
In a filing with the Securities and Exchange Commission, Snyder offered $6.50 a share, or about $140 million, to bring his current 11% stake in the company up to 35% -- enough to wrest control from the current management team.
Putting the company up for sale to the highest bidder is designed not to block Snyder, but to “deliver maximum value to all stockholders,” said Six Flags spokesman Dan Katcher.
Snyder’s Red Zone investment firm declined to comment, making it unclear whether he would now move to buy the company outright.
Six Flags shares rose 72 cents, or 11%, to $7.26.
Industry analysts were hard-pressed to name other possible buyers, ruling out Disney and Universal Studios Hollywood owner General Electric Co.
“The larger media conglomerates are looking to get into growthier businesses such as Internet and cable,” Prudential Equity Group analyst Katherine Styponias wrote in a note to investors Thursday. “At this time, we don’t see any other likely bidders in the market.”
Disney declined to comment, and Universal executives did not return a call for comment.
At least two potential bidders emerged, however -- Orange-based Vision Maker and Los Angeles investor Ron Bension. Last month, both lost out to Blackstone Group in bidding for four Legoland parks, including the one in Carlsbad, Calif.
“We raised nearly a half-billion in our bid for Legoland,” said John Cora, president of Vision Maker, “so it’s clear we think theme parks would be a good business for us.”
The company’s projects include the 2,350-acre Peninsula Papagayo resort opened in Costa Rica last year.
Bension was CEO of Universal Studios’ recreation group from 1990 to 1996, overseeing the company’s theme parks. He said Six Flags was a good opportunity, despite its debt.
“It has good assets that have been poorly managed for some time,” Bension said. “It needs people who are familiar with the industry and know how to make parks work.”
Robb Alvey, who runs a website for roller coaster fans, agreed that Six Flags needed new management.
“When Magic Mountain built Scream in 2003, they just plopped it down on a corner of the parking lot without even an attempt to theme it,” Alvey said. “You can still see the stripes of the parking spaces on the asphalt beneath the coaster.”
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Few thrills for investors
Company at a glance
Founded: 1961
Headquarters: Oklahoma City
Chief executive: Kieran Burke
Operations: Owns and operates 30 theme parks in the United States, Canada and Mexico
Employees in 2004: About 2,370 full time, 34,900 seasonal
2004 revenue: $1.04 billion
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Sources: Bloomberg News, Times research
