Six Flags' Results Land in The Red
Thursday, August 3, 2006
Last fall, Redskins owner Daniel Snyder convinced Six Flags Inc. shareholders that the ailing theme park company would be better off if it were overseen by the likes of ESPN programming whiz Mark Shapiro and Hollywood mogul Harvey Weinstein.
Eight months later, Six Flags is still, as Shapiro put it, in "transition." The nation's largest theme park operator yesterday reported a second-quarter loss of $39.6 million (48 cents a share), compared with a profit of $11.1 million (6 cents) for the second quarter of 2005.
Attendance at the company's 30 parks, including one in Largo, was down 14 percent, to 9.6 million from 11.2 million. Attendance figures were adjusted to exclude three parks that the company plans to dispose of.
Moody's Investors Service Inc. downgraded Six Flags' corporate family rating, saying management's new strategy will require higher spending, "challenging the company's already weak financial position." Moody's concluded: "Operational improvement remains uncertain, with evidence of progress unlikely before the end of summer 2007." But Moody's also changed its outlook on the company to "stable" from "negative."
Six Flags' new management, which took the reins late last year, has learned some hard lessons.
When Snyder and Shapiro were fighting for control of the company, they were less than sympathetic when the former management cited "adverse weather" as a reason for poor performance.
During a conference call with analysts yesterday, Shapiro cited all manner of metrological phenomena while discussing the company's second-quarter loss. Rains flooded the East Coast. A heat wave engulfed Dallas and Oklahoma City, which had 15 consecutive days of three-digit temperatures.
Even worse, bad weather often fell on weekends, which are typically peak days for attendance, Shapiro said.
Bad weather has plagued the industry as a whole, said theme park consultant Dennis Speigel.
"It's going to be just one of those seasons, a flat or down season," he said.
Competitor Cedar Fair LP, which acquired Paramount Parks in June, blamed rain and slowing economies in Ohio and Michigan for a 10 percent drop in second-quarter profit, to $11.1 million.
Beyond Mother Nature, higher spending also contributed to Six Flags' wider losses for the quarter.