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Cedar Fair purchase shouldn't shock

By BENJAMIN ROODE
benjaminroode@sanduskyregister.com

SANDUSKY - Despite the magnitude of the move, Cedar Fair's purchase of Paramount Parks should not surprise investors and fans who have followed the company's recent acquisitions, say local stock analysts.

And industry members say customers will be the big winners with more new rides and bigger attractions.

The $1.24 billion purchase of Paramount Parks by Cedar Fair will purportedly double revenues for the Sandusky giant, according to an investor presentation. Cedar Fair made $568.7 million in 2005 compared to $423.1 million for Paramount the same year.

That makes this a huge move for Cedar Fair, said Patrick Murray, a senior vice president with Smith Barney Investments in Sandusky. Smaller, safer acquisitions, like buying Geauga Lake near Cleveland in 2004 and Knott's Berry Farm in southern California in the late 1990s, allowed Cedar Fair to absorb any changeover costs and give dividends to shareholders quicker.

Knott's Berry Farm is the largest recent acquisition at $252 million in 1997.

The Paramount deal, with its hefty price tag, is a departure from that model, Murray said. The company stuck to its strategy, however, of purchasing parks that put it in a good position geographically.

"They're going to have very little overlap," Murray said. "It follows in line with their geographical diversity, but this is a significantly larger acquisition than anything they've tried to digest before."

Cedar Fair will add Paramount's Kings Island, near Cincinnati; King's Dominion in Virginia; Canada's Wonderland near Toronto; Carowinds in North Carolina and Great America near San Francisco to their family of seven major theme parks across the country. Only Kings Island and Great America are near existing Cedar Fair parks, Cedar Point and Knott's Berry Farm, respectively.

The purchase offers an opportunity to cut overhead costs at those parks while still making a profit at Cedar Point and other existing Cedar Fair ventures, Murray said.

Now having three Ohio parks, Cedar Point, Kings Island and Geauga Lake, will not hurt competition, said Cedar Fair president and CEO Dick Kinzel Monday.

"There's already very little overlap in our existing parks," Kinzel said. "This helps us diversify our opportunities, weather patterns and have room for expansion.

"It is not every day that we have the chance to purchase five great family-oriented parks that fit extremely well with our existing parks."

It's no secret CBS has wanted to unload Paramount Parks for years; the media giant, which split from parent Viacom earlier this year, has enough on its plate without trying to operate seasonal amusement parks that require constant investment to stay at the forefront of the business, Murray said.

Paramount Parks has been on the sales block since January this year, and its sale is not a surprise in the amusements industry, said Beth Robertson with the International Association of Amusement Parks and Attractions.

Buying Paramount parks brings Cedar Fair into the top echelon of park companies, still behind the Disney and Six-Flags companies in terms of annual attendance, Robertson said. Companies like Disney and Anheuser-Busch that have other priorities besides amusement parks probably will not make a similar move and sell off their park holdings, as CBS did in this situation.

CBS is a unique case of a conglomerate selling off its amusement stakes, she said.

"We don't see (others selling amusement interests) happening," she said.

The move from CBS to Cedar Fair could result in more for roller coaster enthusiasts and park-goers to look for in the coming years, Robertson said. Paramount uses movie-themed rides, such a Top Gun at Kings Island and the proposed Survivor: The Ride at Great America in California. Other concerns, such as CBS' television and music stakes, may have drawn money away from park development.

"Cedar Fair is very strong about (park and ride improvement)," she said. "It's not something CBS has been at the forefront of."

FunCoast.com is your online guide to summer fun for Cedar Point, the LakeErie Islands and Sandusky area. Our site offers up-to-date information on area attractions, restaurants, hotels, gasoline prices, ferry schedules, swimming, birding and fishing, along with a complete listing of events happening in the Sandusky/Cedar Point area. To use our Webcam and zoom in on Cedar Point's rollercoasters, go to http://funcam.funcoast.com