DOJ reviewing Cedar Fair and Six Flags merger

As happy as I am to see this, I doubt anything will come of it. I'm not an anti-trust expert, but it's not obvious to me how this would be inherently anti-competitive. Few parks have same-market competition, and it is very much a regional business. No individual park suddenly competes more or less with anything because of this.

I have no expertise in this area either but if airlines can merge with airlines, Hollywood studios can merge with Hollywood studios, etc, I'm not sure why this would be treated differently.

The DOJ blocked the Spirit / JetBlue merger.

(I don't think that's necessarily relevant to Six Flags but as a counterpoint to the above...)

Well, yeah, those airlines compete at every single airport.

PhantomTails:

The DOJ blocked the Spirit / JetBlue merger.

Yup. And now they are emboldened to continue to overstep, over regulate, and not see the forest for the trees.

Wow, that was a sharp left turn. (Well, it was probably a right turn, but you get my drift.)

Cedar Fair didn't provide much in the way of details about the request:

https://d18rn0p25nwr6d.clou...ae5ad3.pdf

Six Flags made similar filing.

I don't think the DOJ has overstepped regarding anti-trust. I think it has been lax about it for way too long. Can't wait to see what goes down with Google. Besides, they have to prove in court that laws were violated or would be violated if they're challenged by the companies involved. It's not arbitrary unless they turn a blind eye to enforcing the thing they're charged with enforcing.

I don't get the Fed response to JetBlue/Spirit. Where is Continental Airlines these days? Oh yeah, they were allowed to merge with United.

Heck...even the XFL and the USFL were allowed to merge.

Government typically looks at impact on specific markets (geographical and industry). Sometimes if there are concerns with a small number of markets, companies can be required to sell off certain assets/operations before a merger/acquisition is approved.

With Six Flags/Cedar Fair, there is little overlap (pretty much limited to California) in terms of geography. If you look at entertainment industry, the competitive effects are small even in California (a state that has a ton of entertainment options).

From what I have seen of the ruling with JetBlue and Spirit, concern of the judge (and presumably the government) was that the parties state that the intent is to make Spirit planes/routes into effectively JetBlue planes/routes which will involve higher fares. Eliminating low fare routes is problematic for cost-conscious flyers. At least per the court. Airlines have appealed the decision.

JetBlue was going after Spirit for planes and gates to accelerate growth to compete with the big four, United/American/Delta/Southwest, because market-share is where profitability comes from. Both JetBlue and Spirit are not profitable; Spirit specifically is going to run out of cash with debt payments coming due. Yet, Spirit caused the four majors to sell a limited number of super cheap tickets on routes that they compete on which is what the judge wanted to maintain.

Obviously for Cedar Fair fans we know exactly what will come of this merger and it won’t be good. Already we are hearing of budget cuts/ jobs lost while the top executives are going to be rewarded with millions while the combined companies will be sitting on billions of debt. Only in America.

wahoo skipper:

I don't get the Fed response to JetBlue/Spirit. Where is Continental Airlines these days? Oh yeah, they were allowed to merge with United.

As I understand it, one of the criteria used is how much closer this specific merger in this specific point in time brings us to a (near-)monopoly. So, the same merger might be allowable in a more crowded marketplace, but not in one that is significantly less crowded.

You look at the markets as they exist at the time. If given markets have become less competitive, an acquisition/merger that is similar to a prior one that was approved may be blocked. And the opposite could happen if given markets have become more competitive: merger/acquisition that is similar to one blocked in the past may get approved today. Part of the analysis of the JetBlue/Spirit combination was the impact of the Continental merger into United.

The criteria the Federal government uses to evaluate the competitive impact of mergers are fuzzy, at best. Perhaps my favorite example is how they effectively blocked Comcast from buying Time-Warner Cable...two companies which did not compete in any market due to the way cable franchises work...but did allow AT&T to buy DirecTV, two companies which effectively competed in every market they served because of the way satellite signals work. And it isn't even because Comcast owned NBCUniversal because AT&T was also permitted to buy Warner Bros. (and then promptly turn around and dump it, but that's another story...)

--Dave Althoff, Jr.
(who is actually kinda glad the Comcast/Time-Warner Cable deal fell apart)

But there's nuance there, too. Satellite was/is not competitive on its own because it's expensive to operate. The alternative was it just going away, and then you don't have anything to compete with cable.

Cedar Fair's largest individual unitholder - Doug Rachlin - who owns 3.4% of the company - comes out strongly against the merger, the Board and Zimmerman.

If the Chairman's first and only defense to his largest unitholder is - "we followed the letter of the law" - it's probably not the right deal for unitholders.

As Rachlin put it, the company is paying SIX shareholders a special $85 million dividend solely to take away the right of FUN unitholders to vote on the merger as FUN unitholders will own 51% of the combined company - yet have equal representation on the board and the Executive Chairman the guy who made a cluster out of SIX. Also, the deal is cost prohibitive for FUN to walk away or for a competing offer, yet SIX can walk away virtually penalty free. Why did Zimmerman and Fisher want SIX so badly that they structured a deal like this?

What a joke Zimmerman and Fisher's leadership has become. As has been shared, Tim Fisher is taking an axe to the guest experience at Cedar Point - particularly gutting Live E in 2024. It's sad to think what the state of the parks and guest experience at Cedar Point, Knott's Berry Farm, Kings Island, etc. is going to be after Fisher and Zimmerman push through this merger.

I am sure Ouimet is thinking WTF did I do giving the stewardship of Cedar Fair to Zimmerman?

https://sanduskyregister.co...s-concern/

Funny how both Ouimet and Iger were great at their jobs and then picked terrible people to succeed them.

I don't think you can really know how someone will react to getting that type of position until the first time they get it, It is true at all levels. If you go back to the entry level positions of organizations, the "good workers" are often the ones who are promoted into supervisory positions. Just because someone can do a task does not mean they can train someone to do a task, or manage a person doing a task. Different skillsets.

It is not a stretch for me to believe a senior executive might not make it as a top executive. And, let's be honest, leaders like Iger and Ouimet are identified as special because they are uncommon.

"Richard has the skills and experience required to lead the company forward," Ouimet stated. "He has been a great thought partner to me and has made major contributions to our strong performance, including being a key driver behind such successful initiatives as Fast Lane, season passes and our all-season dining and beverage programs."