VERY interesting Motley Fool article

[The Interpreter]

Compares and contrasts Cedar Fair and Six Flags, and calls CBS a loser in the recent deal:

http://urlci.com/16a922

[erniebald57]

This article draws some reasonable conclusions about the similarities of old Six Flags and new Cedar Fair. The difference between the two is that the Six Flags buying spree consisted of small regional parks with marginal success. Cedar Fair has purchased 5 highly successful operations, two of which had a combined attendance of almost 7 million, one in a large market, one with no competition, and another California park...not to mention they also inherited the Nick franchise...arguably the most popular among the kids. There is quite a difference between the money Cedar Fair spent and the money Six Flags spent. Literally nothing has to be done to make any of the parks successful because they already are. I'm not worried a bit about Cedar Fair stock. This sale is a winner.

[jzarley]

Yeah...this is a good article. But, then again, "Fool" articles by Rick Munarriz usually are. He definitely understands the wasted opportunities for synergy, and Viacom/CBS's inability to understand the value they had in the parks.

I have absolutely no concern about what CF's ownership will mean to the (soon-to-be) former Paramount Parks, but I have some real concerns about the risks for Cedar Fair. We've said all along that if CF were to do this they would have to take on a huge debt to get the deal done...and they have--to the tune of $2B. That's not quite as bad as SF, but darn close. More than one great company has fallen apart after doubling it's size overnight. And, CF has proven that it's not immune from making serious miscalculations (i.e., "it won't affect attendance at all if we get rid of all SFWOA's animal attractions...")

All that being said, however, every industry is going through consolidation right now, so the reality is either you acquire, or get acquired. Also, Dick Kinzel has proven himself to be a pretty apt leader, so I guess if anyone deserves a leap of faith it is him. And, as several people have pointed out, at least CF is spending $1+B on parks that are already successful businesses in their own right.

The real winner here (from their perspective, anyway) is Les Moonves and CBS...not only are they getting out of the park business like they wanted, but doing so at the very upper end of the estimated sale price. (Most industry analysts predicted the parks would end selling for $900M-$1.25B, so this deal came out at the very top of the range.) I hope at some point word gets out about who the other "serious bidders" were...at least one other party must have been bidding pretty competitively to push CF into that offering price. Also, consider this...Paramount Communications bought the four US parks from KECO in '92 for $400M. Granted, you have to factor in the addition of Wonderland and ST:TE and other capital additions, but a 200% return on your investment in 13 years is pretty darn good. Of course, I agree with Munarriz...CBS's logic for getting out of the park business was flawed to begin with...but from their standpoint they have to be happy with the results.

Finally, a few people have expressed surprise that CF grossed roughly $100+M more than Paramount Parks in 2005... Keep in mind that not only do they have more gated parks, but they also have an entire resort side of their business, which generates healthy revenue. Revenues from CF hotel operations alone were nearly $60M in 2005. (And, as Kinzel pointed out several times on the call...CF's per cap spending is nearly $4 higher than PP's. With 12M annual guests, that's a difference of $48M alone.)

And, I know I'll get flamed pretty hard for this...but if I were CF I'd definitely run some models to see what would happen if I lowered the standard gate price, but made Boomerang Bay a separate, gated attraction. (I have a feeling there might be opportunity for some nice incremental revenue there...) I also think I'd be exploring the opportunities for CF-owned lodging development (both hotels and camping). There's a lot of land left to play with there

[Captain Picard]

Things that can make this go bad are Avian influenza, Terror attacks and Gas price. As you have seen it can be bad and still get buy like Six Flags does.