Posted Tuesday, December 13, 2005 9:54 PM | Contributed by Jeff
Viacom Inc. is ready to sell theme parks owned by its Paramount Pictures division, as well as book publisher Simon & Schuster, chairman Sumner Redstone said on Tuesday. The U.S. media conglomerate splits into two companies on Dec. 31, separating its faster growing cable networks and film business from the relatively sluggish CBS television broadcasting and radio operations.
So Howard's move to Sirius is now even affecting the amusement park industry? Talk about an influential guy ... not to mention an industry pooping in their boots and resigning themselves to failure instead of coming up with a good idea for replacement ...
See, Paramount parks are in a unique possition here.
They don't have to sell Like Six Flags. Therefore will only do so for a amount they are worth or more.
Jeff is right, Growth is the issue, Sure you can get a couple hundred thousand more visitors by adding a new attraction, Marketing and other ways but the deal is. PKI averages between 2.5 and 3.5 million visitors and thats not going to grow too much any time soon.
Money maker yes. Enough for a huge corperation to bother with? No.
Question is, Will they be sold whole or individually? What happens to Bonfonatine Gardens?
IMHO what was written a while back, That people within Viacom were willing to buy it will happen and Paramount parks will continue under licencing agreements.
It's not a rumor Rob, they've been saying this publicly for the better part of a year. It came up early on when they started to indicate it would be "good shareholder value" to break out the growth business units from the rest.
And Chuck, I disagree. It's not an issue of being "enough" as much as it is, as you point out, something they can grow. Wall Street is growth horny. They want to see companies just get bigger and bigger and ignore whether or not it's a sustainable business.
When I say "rumor" Jeff I didn't mean of the sale but of when it would likely happen and interested parties.
I think it would be a great chance for one of the groups that got shut out of the SF deal. Much smaller "start-up" so to speak.
The big problem now is product licences. Re-themeing is not an easy thing to do and when you consider the amount of themeing has been used in the past few years (Tomb Raider and Italian Job) I'm sure there will be some kind of deal made.
Growth horny? That's funny. I'm not financially in-the-know, but I wonder how much the opening up of the stock market to small individual investors who can plunk down money via the internet has affected that push. Or is that negligible?
I am sure that the opening up of the stock market to small individual investors who can plunk down money via the internet has affected that push.
People want big money and quickly. We dont want to wait and be patient anymore. Instant gratification.
I am a firm believer in slow growth is better in the long term than is the rapid growth, hiccup, rapid growth, hiccup approach that some businesses see today. *** This post was edited by beast7369 12/14/2005 11:50:22 AM ***
The parks are still a profitable part of the overall company. If they were bringing the rest down or down at all, I'd understand, but I wouldn't think they would make Viacom look bad or anything right? I'd have an amusement park division if I had a huge company if only for the sake of saying I had one. Nonetheless, this should be interesting. As much as Paramount has drained their use of good movies to theme to, they operated solid parks.
There are times when even perception can influence the decision to unload a business unit. You may recall a few years ago that Busch talked about ditching the theme parks, but in the same breath said they did OK. There's something I can't reconcile, how a unit can contribute to the bottom line, but still not be desirable for any reason other than the unit won't likely grow.
I think investors do want the quick buck. When I sold popworld.com and had oodles of cash, I made several short sales of irrationally high stocks like Real and Microsoft. I made five digit gains on some of those. I also took a bath for a similar amount and came out even, but that's because I sucked at really understanding the risks and the real goals of each company.
These days, my biggest thing is Cedar Fair, and I own it not because I expect the price to double, but because the quarterly distribution pays better than most any reliable income vehicle I've seen. Even at $30 a unit it's a 6% annual return, and you can count on it the way you count on the sun rising. No huge score there, but in the long run, I'll do OK with it.
Wasn't the whole point of Viacom splitting to create separate "growth" and "income" stocks from their holdings? The CBS side was designed to be the "slow-but-steady" reliable cash flow businesses. If a successful, stable business in the CBS company is jettisoned for lack of growth, what was the rationale behind the split to begin with? (I mean, other than saving Sumner Redstone from having to choose just one successor between Moonves and Freston <G> )*** This post was edited by JZarley 12/14/2005 3:51:17 PM ****** This post was edited by JZarley 12/14/2005 3:51:55 PM ***
I guess the whole thing with the growth is this. Paramount Parks are about as profitable they can be. CBS (or Viacom if the split hasn't happened yet) could keep them and continue to rake in the money, but would rather invest the money from the sale somewhere they think they can make even more. It’s kind of like Great Wolf Lodge selling a majority of two of its successful locations so that it could continue to expand (if I remember that correctly). If everything works out, great, you’re a bigger more successful company. If it doesn't though, you sold a solid performer and now have a company that isn't worth as much.
What's amazing to me is that Viacom can't learn from Disney how to run their theme park business. Why is Disney the only company that has figured out how to exploit their movies/tv characters from screen to theme park? It's not like Viacom doesn't have a libary of characters to choose from, yet mysteriously, they have yet to make it work at the same level of success as Disney. To me, it's incredbily short sighted. One would think after the success of the Star Trek attraction in Las Vegas they had a blueprint of how to build a ride/show with gift shop, gambling & restaraunt/bar, and yet nothing on that scale in Paramounts own theme parks. *** This post was edited by DBJ 12/15/2005 10:19:19 AM ***