Cedar Fair buys five parks

Tuesday, 23 May 2006

By BRANDI BARHITE
brandibarhite@sanduskyregister.com

SANDUSKY - Cedar Fair solidified its standing as one of the largest amusement park operators in the world after announcing Monday a $1.24 billion acquisition.

While many of the details about what the addition of five Paramount Parks -- including Kings Island, near Cincinnati -- are still being determined, it's not every day five quality family-themed parks come for sale, company officials said.

"Have confidence in us," said Dick Kinzel, president, chairman and chief executive officer of Cedar Fair, during a live conference call. "Have patience. It's going to take some time. We have been able to increase the distribution for 19 straight years. We have their best interest at heart."

Fortunately, Paramount are quality parks with a tradition of safety and guest satisfaction, Kinzel said. Unlike previous acquisitions, Cedar Fair won't have to go in and rebuild them, he said.

Paramount employees are trained similar to Cedar Fair employees, too, according to Kinzel. Safety, service, cleanliness and courtesy held together by integrity are Cedar Fair's cornerstones.

Decisions about the location of the corporate office, employees, theming, season passes, the continuation of discounted admission and food prices are among items being researched, Kinzel said.

Cedar Fair owns and operates seven amusement parks and five waterparks. All parks are operated autonomously, which will apply for the new parks as well, Kinzel said.

The transaction is expected to close during the third quarter.

"Anytime you make an investment that almost doubles the size of a company, it would be considered a risk," said Stacy Frole, director of investor relations.

"The price that we paid -- just slightly over 10.7 times Paramount's last trailing adjusted earnings before interest, taxes, depreciation and amortization," Frole said.

That is a little bit higher than past acquisitions, but with this being multiple parks, Cedar Fair thought it was worth it, Frole said.

Kinzel said Cedar Fair was one of many bidders for the properties, but didn't know whom the partnership competed against. The CBS Corporation, who owns the Paramount Parks division, couldn't be reached Monday for comment.

Kinzel said the Paramount Parks will keep the Nickelodeon characters and theming, but the partnership is still considering the use of the Paramount theming throughout the parks.

Decisions about bringing Nickelodeon theming, which includes SpongeBob SquarePants, to Cedar Fair parks, or bringing the partnership's Snoopy to the Paramount Parks are decisions being made.

"It is so exciting that Paramount theme parks will be a part of a company whose primary focus is theme parks and entertainment," said Kings Island spokeswoman Maureen Kaiser. "Before we were under CBS and Viacom, which is many things."

The $1.24 billion purchase was made in cash, which is normal, according to Peter Crage, corporate vice president of finance and chief financial officer for Cedar Fair.

On a combined basis, Cedar Fair and Paramount generated almost $1 billion in revenues and entertained approximately 25 million guests in 2005.

Cedar Fair is now in a position to be the largest regional amusement park entertainers in the world, Crage said.

"This is our first investment outside of the United States," Kinzel said. "We never have been enamored to go to Europe or Asia; we have concentrated our efforts in North America."

Cedar Fair's purchase of five Paramount Parks will bring financial and weather diversity to the partnership, Kinzel said.

Cedar Fair reported $569 million in revenues in 2005 with the bulk from Cedar Point in Sandusky and Knott's Berry Farm, near Los Angeles, Kinzel said. With the acquisition, the partnership can "spread the load out," he said.

Kinzel said with each of the parks in their own area, capital projects will be determined on a park-by-park basis. Cedar Point will remain the flagship park.

"Cedar Point is the engine that drives Cedar Fair," he said. "We have a great capital program in place for the next four years.

"There's an incentive for Cedar Point to continue what it is doing. We have over 400 rooms here, a campground, cottages -- those are huge incentives to improve Cedar Point," he said.

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

Copyright 2006 the Sandusky Register. All rights reserved.

All materials contained on this site are protected by United States copyright law and may not be reproduced, distributed, transmitted, displayed, published or broadcast without the prior written permission of the Sandusky Register or FunCoast.com. You may not alter or remove any trademark, copyright or other notice from copies of the content.