Posted Friday, January 27, 2006 8:51 AM | Contributed by pkidelirium
The CBS Corporation announced today it intends to divest its Paramount Parks division. The Company indicated that numerous parties have already expressed interest in acquiring the operation, and CBS Corporation expects to complete the divestiture in the second half of 2006.
Any chance that perhaps the parks will be sold off to themselves, kind of like what happened when Arrow Dynamics was formed back in the '80s from Arrow-Huss? There are some really competent park people at Paramount who have been running that operation since the KECO days, and I could see them making a new company of it...
I have heard from various folks that certain Cedar Fair executives have been visiting the Paramount properties. I'm sure CBS would prefer they go as a package deal. Jeff poses it correctly...IF Cedar Fair can finance it.
That would be a pretty big move for the conservative Kinzel and gang but we've heard before that Kinzel regretted not buying Geauga Lake years ago. I don't know enough about the Limited Partner status to know if a park outside the country would have a significant impact on the partnership structure.
A few years back Busch came out as putting a moratorium on park buying. I don't know if that stands. Six Flags is in the midst of getting their act together. That would be pretty risky for them too. If CF could get a financing partner I wonder if they would consider changing the corporate structure in order to go to the next level.
The article said "numerous parties have already expressed interest in acquiring the operation". Since they said operation rather than properties, hopefully that indicates none of the interested parties would give the parks the SFAW treatment.
Paramount's management contract with Bonfante Gardens was for only 5yrs anyways, which I believe will expire next year. The park is doing just fine now, don't see any problem with them taking it from here. The cool thing is, Michael Bonfante moved to Branson, MO right after he cut the deal with Paramount, I'm hoping he moved there for a reason, to get first hand knowledge from HFE on how to run and manage a world class family park on his own.
Don't be surprised to see PGA go the way of SFAW. A landlocked property with no room for expansion, in the heart of Silicon Valley with some of the highest land prices in the country. The city has also been trying to years to build a stadium in PGA's overflow parking lot, this could be their chance. And with the minimal investments Paramount has made in PGA since taking over, sure does sound like another SFAW situation to me.
In previous articles there was mention of getting back to their core business. Parks and publishing were the two pieces mentioned.
Possible reasons for selling a profitable division? 1) Desire/need for upper management to focus on other areas 2) Quick infusion of a large amount of cash 3) Division could be projected to go from a money-maker to a money-loser in the future 4) If licensing is included in the deal, guarantee a revenue stream without the the overhead of running the parks themselves
I'm sure others could come up with plenty of other reasons.
CF might think this is a lot to take on in one bite...*slow but steady* has been their MO for quite awhile now...
NOT saying CF won't do it, or shouldn't consider it, just that it seems a bit "out of character" for them...then again, this is an opportunity that may not come around again, and the Paramount parks are very nice, well-maintained, well-run properties that are highly marketable, in good locations, and with good CS reputations...
The potential drawbacks? ALL those wooden coasters (yikes!), and of course, PGA...
Well unless the Viacom exects that were originally mentioned as interested to buy the parks, Im sure any Licensing will be dated.
CF ripped out in two months anything licensed at Geuaga.
Personally theres good things to *Themed* and bad things IMHO.
You get a bunch of rides themed to 10-15 year old movies (Top Gun ect.) And nobody's gonna give a crap if its called Dominator or thunderhawk, without the Gillette theming.
The only place a MOVIE or Show theme helps is you childrens area.
The rest can just be Western Frontier and Racer Midway. It's worked well for decades.
Paramount has been successful through value and service and making it more family oriented only. The theme *Ride the movies had very little to do with it IMHO.*
Paramount parks were also well designed to start with, Well before Paramount every came into the picture. They improved, Upgrades and cleaned it up but also cut the number of attractions in half at all but PCW.
Im not badmouthing Paramount here, Not one bit. I honestly think the Movie Theming however, Isn't what makes it sucessfull.
...of course, Six Flags hasn't been owned by Time-Warner for nearly a decade, and their media properties are still alive and well in the SF parks.
It really depends who/what buys the parks and how motivated CBS/Viacom is to keep their licensing in parks. (I'd think they'd be pretty motivated...although they haven't shown "synergy" to be a real strong skill in the last 12 years, so I guess why start now...)
Chuck, I think you are underestimating the importance of the Nick license. I know we usually just think of the big rides but having that Nick license would be very important esp. after you just changed all of your kiddie areas to that theme.
Here's a thought... Let's say that CF gets the financing together to buy Paramount Parks as Jeff mentioned (which, quite honestly, as a unit holder I have mixed feelings about...). CBS/Paramount/Viacom wants out of the theme park business, but they don't necessarily want to lose the exposure of their media properties in theme parks. Why not work out a deal with CF so that not only can the theming continue at the Paramount Parks, but CF could use some of the licenses at their existing parks? That way, CBS expands their media franchises presence (without the trouble of owning/operating parks) and CF gets a proven attendance generator (Nick)?
Just an off-the-cuff thought...honestly, my money is still on Blackstone :-)*** This post was edited by JZarley 1/28/2006 10:32:13 AM ***
If Cedar Fair were to buy even just PKI could you imagine the increase in size of the CF market? With PKI being the most attended seasonal park in the country and CP up there on the list, too... damn.
It would be a very large investment to buy such well-established parks, though. I'm not sure if I'd want them to take on that much debt, regardless of how much it'll pay off in the end. That could be a scary thing for investors.