June 8, 2016
Shareholders claim new evidence shows ‘Blackfish’ hurt attendance
ORLANDO, Fla. – A group of investors have renewed their previously-dismissed lawsuit against SeaWorld Entertainment Inc., claiming the company misled them about how the documentary “Blackfish” was impacting theme park attendance and revenue.
In an amended complaint filed last week, the investors cited SeaWorld’s recent decision to end its killer whale breeding program as further evidence that the 2013 documentary had changed the marine park’s core business.
“The announcement was a tacit acknowledgement that SeaWorld could no longer afford to deny the profound impact ‘Blackfish’ has had on its business or continue to blatantly ignore the data showing a clear shift in public sentiment regarding its killer whale program,” the newly-filed complaint stated.
A federal judge dismissed the investors’ original lawsuit in April. According to U.S. District Judge Michael M. Anello, the shareholders failed to present sufficient evidence that theme park attendance was harmed by the 2013 film, which criticized the practice of keeping killer whales in captivity.
“Plaintiffs make no direct allegations regarding surveys, market research, models, data, or other reports that show any of the negative publicity prevented people who would have otherwise visited a SeaWorld Entertainment park… from doing so,” wrote Anello.
The shareholders also failed to show SeaWorld executives misled investors in late 2013 when they publicly stated “Blackfish” was having no notable impact on attendance, according to the judge.
The investors, which include the Arkansas Public Employees Retirement System and a teacher’s pension fund based in Denmark, have attempted to address some of those legal deficiencies in their amended lawsuit.
In the newly-filed complaint, the plaintiffs presented additional data compiled by the Themed Entertainment Association, a nonprofit amusement industry organization that provides unofficial attendance figures for many theme parks.
“Historical attendance figures demonstrate that attendance at SeaWorld-branded parks, Disney parks, and Universal parks in the Florida and California areas ordinarily rise and fall together,” the complaint states.
In 2014, after “Blackfish” was released, SeaWorld Orlando suffered an 8 percent decline in attendance and SeaWorld San Diego lost 12 percent of visitors, while Disney and Universal parks saw comparable or increased attendance, according to the lawsuit.
At the time, SeaWorld executives blamed the attendance problems on bad weather, the timing of holidays, and ticket price increases, the complaint states.
“Historical attendance figures demonstrate that the dramatic attendance declines SeaWorld-branded parks saw in 2013 and 2014 had to be the result of ‘Blackfish’ and not the other generic excuses SeaWorld offered,” according to the complaint.
In their new court filing, the plaintiffs claim the company makes it difficult for investors to differentiate attendance trends at its three SeaWorld-branded parks – which display killer whales – from its 11 other theme parks like Busch Gardens, Aquatica and Sesame Place.
“SeaWorld admittedly does not disclose the attendance figures at its individual parks to its investors or the public,” the complaint states. “Thus SeaWorld’s concealment of these figures prevents investors from being able to confirm the accuracy or falsity of [statements made by SeaWorld executives].”
SeaWorld has previously claimed in court filings its fluctuating attendance trends did not correlate with the airing of “Blackfish.”
The company also suggested SeaWorld-branded marine parks, which were the subject of the documentary, outperformed their other amusement properties during that period.
“Although ‘Blackfish’ premiered on CNN early in the fourth quarter of 2013 (and was purportedly viewed by millions), it was this very quarter that the SeaWorld-named parks had record setting attendance,” SeaWorld attorneys wrote in their motion to dismiss the original lawsuit.
The following quarter, SeaWorld Entertainment Inc. reported a 13 percent drop in attendance companywide, which the company blamed on several factors except “Blackfish.”
“Indeed, that attendance declines at SeaWorld were attributable to bad weather during certain peak times, the timing of the holidays and SeaWorld’s intentional pricing strategies, which decreased attendance while increasing revenue, is a far more compelling and cogent inference than fraud,” according to SeaWorld’s attorneys.
On Aug. 13, 2014, SeaWorld officials announced another 4.3 percent decline in attendance. In a filing with the U.S. Securities and Exchange Commission, SeaWorld acknowledged for the first time that attendance “was impacted by demand pressures related to recent media attention surrounding proposed legislation in the state of California.”
The proposed California law would have banned the display of captive killer whales for entertainment purposes. The bill’s sponsor, California Assemblyman Richard Bloom, said the proposed law was partially inspired by “Blackfish.”
That same day, SeaWorld’s stock price plunged 33 percent.
“The company had finally admitted that ‘Blackfish’ was hurting attendance at SeaWorld parks,” the investors wrote in their original lawsuit.
SeaWorld insisted the SEC disclosure was not about “Blackfish.”
“Notably, this same disclosure also included guidance that SeaWorld had significantly lowered its full year revenue numbers, a more plausible cause for the subsequent stock price drop,” wrote SeaWorld’s lawyers.
In their newly-filed complaint, the investors suggested SeaWorld may have been worried about the impact of “Blackfish” as early as Thanksgiving 2013. That’s when People For the Ethical Treatment of Animals (PETA) claims their organization was infiltrated by SeaWorld employees posing as animal rights activists.
SeaWorld officials later acknowledged its employees had spied on the organization. It has since stopped the practice, according to SeaWorld CEO Joel Manby.
“SeaWorld’s chosen strategy was to ignore ‘Blackfish’ and deny its credibility – both to the public and investors,” the new complaint states.
The judge has given SeaWorld until June 29 to file a motion to dismiss the amended lawsuit.