Viacom Looking for buyers for Paramount Parks?

[CoastersRZ]

Just checked out Screamscape today. According to Screamscape, "In an article posted in Variety this week, Viacom head honcho Sumner Redstone mentioned that he may be shopping around Paramount Parks and their Simon & Schuster divisions in addition to other small assets."

I found this some what surprising. First off, I thought that the theme park division brought in good money. Secondly, the parks in recent years have been amping up their tie ins to Paramount Pictures movies. Whether this has any truth in it is beyond me. I don`t know if they would have any interested buyers. Six Flags, well they are not in a buying mood because they have sold parks reently to recover capital to pay off their massive debt. I doubt Cedar Fair would be interested, or at least in Kings Island, because they already own two parks in Ohio, and have competing parks in some of the other Paramount Parks market. That leaves Busch Gardens, and I really don`t forsee them being interested in acquiring more parks. So the low demand for purchasing parks and the fact that I thought Paramount Parks made money, leads me to believe that this will not be happening. But stranger things have happened.

[Alien Seed]

There's no way they can sell. Not with IJST and TRTR among other things. You can't just give them non Paramount names like they did with FOF. They have their movies written all over them.

[Shman]

You beat me to it.....I was just about to add a topic about this article I saw in Variety. The Variety website is a members site, but does offer free trails in-case anyone wants to read the article in full, but basically what it written above is the extent of the information given.

I do find this very interesting do to the overall focus in all of the Paramount parks to theme and re-theme attractions to tie-in with Paramount movies and other Viacom entities. However my question comes in the form of this: Is it possible for Viacom to sell off "Paramount Parks", but for Paramount Pictures to still offer the naming and theming rights (sort of what Hanna-Barbera did). However even in this case the rights would most likely expire at some point and the park would be faced with a major re-theme/re-name project, similar to what is going to happen when the Hanna-Barbera contract ends in a few years.

So what could happen......maybe would could see the renewal of Kings Entertainment and a return to the somewhat older ways the park was run? Or maybe we would be bought out by another major theme park corporation (However I don't really see any of them going for our parks). Or maybe the parks will just divide into their own identities.......who knows. Of course this is all based on a small comment made, and it may not even be happening anyways.....we'll just have to wait around and see.

[CoastersRZ]

Very interesting. I doubt this will ever amount to anything, but it certainly raised my attention.

On the Hanna Barbera side of things. Doesn`t Paramount Parks` license agreement with the Hanna Barbera rights end at the end of 2009? If so, what happens to Scooby and the rest of Hanna Barbera Land? Will Scooby Doo and the Haunted Castle be rethemed, and will there be just one big Nickelodeon Central?

[Shman]

Not with IJST and TRTR among other things. You can't just give them non Paramount names like they did with FOF. They have their movies written all over them

This must have been added while I was typing my first response. Really you can give them non-paramount names....you just have to get creative. Just because they were originally built and themed for a Paramount movie, doesn't mean you can't change it. For instance TRTR could easilly be transformed into the original concept for the ride "Inferno" Just change the story line around a little bit and maybe remove some of the original theming elements and you have a "new" ride with a generic theme. Also IJST could be re-themed to anything that had to do with cars...the only reason we say "oh, that is Italian Job" is becuase we know that is what it is built to simulate....however...you couldn again change the story around to create any type of "car chase" aventure ride. You just have to put a little imagination into the re-themed storyline.

Doesn`t Paramount Parks` license agreement with the Hanna Barbera rights end at the end of 2009? If so, what happens to Scooby and the rest of Hanna Barbera Land? Will Scooby Doo and the Haunted Castle be rethemed, and will there be just one big Nickelodeon Central?

If I remember correctly all of the Hanna-Barbera references are to be removed from the park by 2007/2008???? Do to the contract ending. I think they did make special arrangements to keep Scooby-Doo as the only licensed HB character at the parks. I would look for one big Nick Central area with a bunch of re-themed rides.

[Alien Seed]

Not with IJST and TRTR among other things. You can't just give them non Paramount names like they did with FOF. They have their movies written all over them

This must have been added while I was typing my first response. Really you can give them non-paramount names....you just have to get creative. Just because they were originally built and themed for a Paramount movie, doesn't mean you can't change it. For instance TRTR could easilly be transformed into the original concept for the ride "Inferno" Just change the story line around a little bit and maybe remove some of the original theming elements and you have a "new" ride with a generic theme. Also IJST could be re-themed to anything that had to do with cars...the only reason we say "oh, that is Italian Job" is becuase we know that is what it is built to simulate....however...you couldn again change the story around to create any type of "car chase" aventure ride. You just have to put a little imagination into the re-themed storyline.

A typical car chase with three mini coopers, a helicopter, and a dive into an aquaduct? Yeah, you'd better get REALLY creative with the name change. Sorry, but that would be like changing JP River Adventure's name to Carnosaur R.A.; it just wouldn't quite work. And about TRTR: the story change would be no problem, it doesn't follow the movie anyways. But, you would have to tear out the entire cave part of the queue. Everything in it says "Hey look, I'm from Tomb Raider."

[PkiJake13]

Maybe they were referring to the small or not as themed park. Maybe those parks are the ones they wil sale, if they sale. The only parks to keep then in PKI, PKD, and PCW.

-Jake

[CoastersRZ]

PKIJake13, your post makes no sense. First of all, the article mentions selling Paramount Parks as a whole, not individual parks. Secondly, Paramount`s Carowinds and Great America, while no the largest parks in the chain, still bring in quite a few people, and I would assume quite a lot of money as well. This will probably amount to nothing more than this brief article, but it is certainly interesting to note that Viacom considers the theme parks expendable.

[Kenban]

I do want to point out that not to long ago GE was looking into selling the Universal Orlando theme parks but they have decided to not look into it again until 2006. Heres the news story.

Funny thing is if you read it turns out the agreement is to give Universal Orlando another year to improve its finacial health.

I think the orlando parks would end up similar to the Disney parks in France. What happens is that Disney while they own a piece of the parks does not really own that much of it but they get a nice payment each year for the rights to use the Disney name, the ride designs etc.

Is that what happens to PKI ?? I hope not but its hard to say. Really I think they are going to hold on to them for a while but who knows. One of the big things for major companys to do right now is cut out the side units (even if they make money) and focus on the 'core' business.

[AZ Kinda Guy]

Maybe they'll find a buyer who doesn't make their employees pay for their uniforms?

[BoddaH1994]

I doubt Cedar Fair would be interested, or at least in Kings Island, because they already own two parks in Ohio, and have competing parks in some of the other Paramount Parks market.

If Cedar Fair bought PKI, it would be bad news for our little park. I'm willing to say that CF would want to pour their money into their flagship park when it comes to Ohio.

Maybe they'll find a buyer who doesn't make their employees pay for their uniforms?

Dude, get over it! It's $20! You paid almost that much for just one Best Buy shirt.

[Captain Picard]

It wouldn't be surprising to me, but don't worry nobody wants to buy theme parks.

The people with the money to do it know there is better ways to make money.

Cedar Fair is different, that is all they do, not like Viacom or GE. I don't think Cedar Fair has the buying power to buy a park chain. I would guess it would take about 1 billion to get Paramount Parks.

If it did happen, it would be like the plans for the China park, it probably would have the Paramount name and that is it. They would still make money off it but remove them selves from the risk. This is what partner is to Viacom, you pay for it and we will put our name on it.

[The-Snapper]

See I told you all so Cedar Fair is going to Buy PKI!!!!!! LOL

[CoastersRZ]

If Viacom does end up selling Paramount Parks, I would imagine that there would be some sort of license agreement to at least allow the use of the Paramount branded movies, and Nick branded shows. Depending on who purchased the park, they may even drop the Paramount moniker. (If Cedar Fair bought the park I would imagine that they would drop the Paramount moniker.) When Paramount bought Kings Entertainment Corporation (KECO) back in 1992, they purchased the four parks for $200 million. I would imagine that the cost to buy Paramount Parks now would be triple or quadruple that amount at least. I don`t know if they are worth $1 billion though. Yes, I don`t think Cedar Fair would be A. interested, and B. have the capital to purchase the parks.

As stated above, there aren`t too many companies interested in purchasing theme parks right now. The reason GE held onto the Universal parks is they could not find a buyer and they want to make the financial statements of the park look better so prospective buyers would be more interested in purchasing them. Only time will tell if Viacom decided to sell the parks to focus on its core brands, spin them off into their own seperate entity or sell them. I don`t know much the workings of Paramount Parks, but I always thought that they were ran independently of the rest of Viacom and Paramount Studios, but that they had to report their financial statements to Viacom, or the entertainment division of Viacom.

[AZ Kinda Guy]

Maybe they'll find a buyer who doesn't make their employees pay for their uniforms?

Dude, get over it! It's $20! You paid almost that much for just one Best Buy shirt.

No I'm not going to get over it. It's hard too when every year it seems like we get perks taken away from us. Any grizzeled vet can vouch for me.

[jzarley]

There are a few possibilities here...

1) Redstone may be publicly indicating a desire to sell off some assets to impress on Wall Street that he's focusing on the company's core businesses. Of course, these statements may be purely for Wall St's benefit, and they may not be really serious about selling anything...

2) Sell all (or a portion of ownership) of the parks to an investment or real estate trust (known as a REIT). Then license the Viacom media properties back to the parks for a fee, and perhaps even maintain a management contract to run the parks. Time Warner did something similar when they divested a majority share of Six Flags.

3) Spin off Paramount Parks as a separate company, much like they did with Blockbuster Entertainment last spring.

4) Sell the chain of parks to another park operator who'll rebrand the parks and inegrate them into their chain. I think this is the least likely possibility. Busch has made some noise that they'd like to reduce their exposure in theme parks; Cedar Fair (while an exceptional company) couldn't pull off an acquisition of this size without taking on a huge amount of debt or finding someone with a whole bunch of cash; Disney could bankroll it, and certainly has the expertise, but they've already had one bad experience with trying to develop a regional entertainment division, and may not be so quick to try it again; and Six Flags...well, that one speaks for itself.

If they do desire to sell the parks, my guess is that #2 would be the most likely option. That would allow Viacom to continue the synergy of having their media properties in the parks, without the liability of actually owning them. (Real estate does strange things to a balance sheet...it's basically an asset AND a liability at the same time.)

I would also guess that the poster predicting a purchase price approaching $1B is probably pretty close. I was thinking that the purchase price for the four parks in 1993 (Wonderland wasn't part of the original deal...it was acquired the following year) was around $400M (someone earlier said $200M...which could have been the actual cash that changed hands...but for someone reason the $400M number as the total purchase price sticks in my head.)

But, also remember point #1...Sumner may just be trying to get a quick rise out of the stock price by saying they're thinking about unloading some property. :-)

Joel

[CoastersRZ]

To the best of my knowledge, Canada`s Wonderland was built by Taft Broadcasting and then later owned by KECO before being sold at the same time as the other KECO parks to Paramount. Viacom didn`t enter the picture until they purchased Paramount in 1995. It very well may have been $400 million, but for some reason, $200 million also stands out. Here is what I know about the history of KECO and how Paramount Parks came to be and to my knowledge all this information is correct.

In late 1983, a group of general managers at the Taft parks as well as several vice presidents at Taft Broadcasting led by Nelson Schwab III, purchased the parks. They then formed their own company to manage and own the parks, the Kings Entertainment Company (KECO).

In 1985 the Marriott Corporation, owner of the Great America parks in Santa Clara, California, and outside of Chicago was selling the parks. They sold the Illinois park to Six Flags. The California park was sold to the City of Santa Clara Redevelopment Agency. The city then entered into a management contract with KECO for five years with an option for KECO to purchase the park at the end of the contract. KECO would later enter into a management deal with Great America in Santa Clara California. In 1989, KECO exercises its option to buy Great America`s business assets (buildings, rides and equipment) from the City of Santa Clara. Also, KECO then entered into a 50 year land-lease with the city`s redevelopment agency.

Meanwhile, in 1987, KECO was reorganized as Carl Lindner purchased the majority of the shares of Taft Broadcasting and KECO. KECO now owned 100 percent of the parks, except for Great America. Carl Lindner continued to let KECO operate the parks. However, the parks were rapidly loosing steam and money under Lindner`s direction. So, on July 31, 1992 Paramount Communications purchased KECO, which by this time was comprised of five parks. In 1993, all five parks were rebranded as Paramount Parks.

I agree that if they are shopping the parks around, it is unlikely that they will sell them to another park chain. Instead they will do as you say and either spin them off as their own company or form a trust to own the parks.

[BoddaH1994]

Maybe they'll find a buyer who doesn't make their employees pay for their uniforms?

Dude, get over it! It's $20! You paid almost that much for just one Best Buy shirt.

No I'm not going to get over it. It's hard too when every year it seems like we get perks taken away from us. Any grizzeled vet can vouch for me.

It's like that everywhere all the time. I bet the promoted this stuff like it was a great thing and it's a great opportunity for you too.

I remember when my work restructured and a LOT of people got demoted. They had this big hyped meeting about it and how this was such a great thing, but in all reality, it quickly hit the fan and stayed shrouded.

[TheKlockster]

I know Staples used to charge you for uniform shirts until recently. Now they are free. As this is my first year at PKI - I won't miss perks that have been taken away. But it seems like there are still alot of them - including getting to work at the coolest place in Cincinnati. But a lot of companies do this - expect more out of their employees by giving them less. I mean why give them perks when they could not give them perks?

[jzarley]

To the best of my knowledge, Canada`s Wonderland was built by Taft Broadcasting and then later owned by KECO before being sold at the same time as the other KECO parks to Paramount. Viacom didn`t enter the picture until they purchased Paramount in 1995. It very well may have been $400 million, but for some reason, $200 million also stands out. Here is what I know about the history of KECO and how Paramount Parks came to be and to my knowledge all this information is correct.

Yeah, I'm pretty sure you're right about Wonderland being built by Taft and being part of KECO. The layout of the park is way too similar to PKI and PKD to be accidental <g>. However, there was something weird about the initial purchase by Paramount Communications in 1992 that didn't include Wonderland. I can't recall the details, but it may have been related to a foreign media company's ownership in Canada... When the four US parks were rebranded as "Paramount" for the 1993 season, Wonderland was not. It got rebranded as a Paramount Park in 1994. I searched on the internet, but couldn't find any details about why Wonderland didn't get its "P" in 1993 like the four US parks. The only thing I could find was a fan site with images of brochures that shows the change in 1994...

http://www.pcwjunkies.com/pcw/vault/mapguide.htm

I also found a reference in an article of Variety from November 1992 that lists the sale price of KECO as $400M. The reason that stuck in my mind at the time was that I thought it was basically $100M each for the four US parks, but figuring KI had to be more valuable than the other three.

http://print.google.com/print/doc?articleid=4xJWpOPZs76

CoastersRZ--we should get together and write our own book about PKI's history. Sounds like we've got it covered :-)

Joel

[CoastersRZ]

LOL, yeah I have an entire 29 page word document with information on PKI. I`ve compiled quite a lot of information over the years on the park.

[Captain Picard]

I have been saying that if they sell the campground land that it was not good news.

Everyone keeps thinking how great that would be, but they are not looking at the big picture. I think giving up the campground is first sign of this rumor becoming true.

[CoastersRZ]

Really I don`t see how the closure of the campground at PKI wilol lead to the demiss of the entire chain of Paramount Parks. As was stated in an earlier post, this could merely be a move to try and boost the stock of Viacom.

[Captain Picard]

It's like Sears selling off National Tire & Battery, it shows you that they are getting out of the auto service bis . Then what happens, Sears is sold to Kmart.

It's the way it's done, you sell your valuable assets first. There maybe nothing going on at all who knows. If there is something to it, maybe they will say in Q4 report.

[KIBeast]

That is a really horrible comparison. National Tire and Battery compared to PKI's campground? C'mon, that's a bit of a stretch, don't you think? It's not like the campgrounds was a huge division of PKI and is a really valuable asset on its' own. Maybe the Snapper was right after all. Maybe Cedar Fair is buying PKI or its' chain. Does anyone here really know if CF has that kind of capital? I think you guys are just guessing and saying no, even though you don't know. Personally, I hope PKI is sold to someone better at managing the chain. They have, for the most part, ruined King's Island and if Paramount sells out, I say good riddance.

[Captain Picard]

It's the only one I could think of. You would see how valuable that land is if PKI didn't have it and wanted it. Who would be better at managing when PKI is the #1 seasonal park in the world?

[Ryan]

I agree that option 2 would be the most likely. While Viacom most definetly does not like the liability of the parks, having their entities all over them certainly is a plus. And Paramount Parks management would most likely not like to completely change their image up, staying Paramount Parks and using movie licenses is a great marketing tool and allows for diversity within the industry. I doubt any of this will actually happen though.

[jzarley]

That is a really horrible comparison.  National Tire and Battery compared to PKI's campground?  C'mon, that's a bit of a stretch, don't you think?  It's not like the campgrounds was a huge division of PKI and is a really valuable asset on its' own.  Maybe the Snapper was right after all.  Maybe Cedar Fair is buying PKI or its' chain.  Does anyone here really know if CF has that kind of capital?  I think you guys are just guessing and saying no, even though you don't know.  Personally, I hope PKI is sold to someone better at managing the chain.  They have, for the most part, ruined King's Island and if Paramount sells out, I say good riddance.

As a CF stockholder, someone who reads (and re-reads) their annual report, and listens to each quarter's conference call, I can tell you that a complete buyout of Paramount Parks by Cedar Fair is currently beyond their means. The information is readily available to anyone who takes 30 seconds to read their 10Q. There is no "guessing" on this point--it's public record to anyone who wants to read the balance sheet.

Cedar Fair is a favorite of analysts because it's well run and conservative. They expand slowly and carefully, all the while growing revenues and dividends. It's not a high growth stock, but it's a very stable stock. Taking over a chain the size of Paramount Parks simply isn't consistent with how they've historically managed the company. Could they leverage the company to borrow the money to do it? Probably could--but why? Six Flags has proven that it's a bad idea to take on huge amounts of debt, buy more than you can afford, and hope volume makes up the difference.

I agree with you 100% about the Nat'l Tire & Battery comparison... Not only is the campground not the most valuable part of PKI (and, it still hasn't been confirmed that they're selling the land to Great Wolf or leasing it), but Paramount Parks is far from one of Viacom's most valuable assets. The entire "Entertainment" division (which includes parks, Paramount Studios, publishing, and the chain of theaters) contributed less than 17% of Viacom's total revenue in 2003. Breaking that down, the parks probably contribute in the neighborhood of just 2-4% of total sales.

We're probably all reading a lot into an off the cuff remark (made by a guy who is famous for off the cuff remarks <g>) in the entertainment trade daily. Both Wall St. and Hollywood have been slamming Viacom for Paramount's dismal performance in movies over the last few years. (I mean, when one of the attraction theming suggestions in the park's survey is "Mean Girls", you know it's pretty bad.) What Redstone is really trying to get across is that they're so serious about improving the studio's performance, that they may consider selling off less valuable "distractions." Keep in mind this quote was made in Variety--not in Amusement Business.

If Viacom decides to sell the park business, I think they'll have an easier time finding a buyer than NBC/Universal would with selling their theme parks. Not only is Paramount Parks coming off a great season where they outperformed the competition, but the regional parks have proven that they can better weather economic downturns and other events that diminish travel. I still believe the most likely buyer would be a real estate investment trust that would license the Viacom media properties to use in the parks. (Similar to how the Blackstone Group owns 50% of Universal Studios, and Boston Ventures bought SF from Time Warner...)

If that were to happen, how much would it really affect us? There was already one huge change in ownership in 1994 when Viacom purchased Paramount Communications. From what I've heard, internally there were quite a few shakeups, but to those of us on the outside it seemed pretty seamless.

Joel

[CoastersRZ]

That is a very good point. PKI while owned by Paramount Parks since 1992, the parent company of Paramount was indeed bought by Viacom in 1994. To the guest, the only visible change that occured to the parks was that Nickelodeon properties were introduced, and early on they were not pushed as much as they have been in last couple of years.

[Captain Picard]

No one other than Variety has any info on this that I can find. Anyone find more than that? I would think if Redstone said it, it would be all over the net.