Deal puts Cedar Fair solidly in top 3 park operators

Wednesday, 24 May 2006

Paramount purchase means only Six Flags and Disney between it and the top.

By BRANDI BARHITE
brandibarhite@sanduskyregister.com

SANDUSKY - Cedar Fair has carved itself a spot among amusement park giants, such as Disney and Six Flags, with the deal that nearly doubled the size of its company.

The mega deal also gives the once-small regional park buying power, as well as opportunities to expand upon the more than 900 undeveloped acres that come with Monday's acquisition of five CBS-owned Paramount Parks for a cash purchase of $1.24 billion.

"It is, by far, the largest deal we have ever done. We are doubling the size of the company. Yes, you can call this a blockbuster deal," said Brian Witherow, Cedar Fair vice president and corporate controller, on Tuesday.

"We have realized over the years, going from two parks to seven now, you get buying power for certain items," Witherow said. "All of our parks are Pepsi parks -- it's a more lucrative deal with more guests. We believe fully there will be buying power as we go to 12 amusement parks."

Although Walt Disney Attractions is still clearly the largest amusement park operator with Six Flags in second, Cedar Fair is solidly in third now, according to industry expert Beth Robertson.

Cedar Fair and Paramount were kind of at the same level before, but not anymore, Robertson said Tuesday.

In 2005, Paramount Parks generated revenues of about $423 million while entertaining 12.2 million guests. Cedar Fair reported $569 million in revenues and 12.7 million guest visits. On a combined basis, the two companies generated almost $1 billion in revenues and entertained approximately 25 million guests in 2005.

"This is a huge purchase for them," said Robertson, vice president of communications for the International Association of Amusement Parks and Attractions, Alexandria, Va. "It was well-researched. Paramount Parks are already up and operational."

The deal -- which will close in the third quarter -- also includes the management of Star Trek: The Experience at the Las Vegas Hilton and Bonfante Gardens in Gilroy, Calif., which Paramount Parks developed and managed.

The acquisition doesn't include the Great Wolf Lodge indoor waterpark being built at Kings Island, which wasn't part of the deal, according to Witherow.

"The Great Wolf Lodge wasn't part of the core deal," Witherow said. "CBS is holding onto it. The core deal was the parks. CBS doesn't own the Great Wolf Lodge, but has a stake in it."

Cedar Fair CEO Dick Kinzel has said he's interested in expanding the indoor waterpark concept, but it wasn't part of this deal, Witherow said. Cedar Point's indoor waterpark Castaway Bay opened in 2004.

"I thought this would be an ideal acquisition for Cedar Fair," said Jim Futrell, historian for the Chicago-based National Amusement Park Historical Association. "After buying Geauga Lake, I didn't think they would let another major operator in the state."

Cedar Fair already owns and operates seven amusement parks and five waterparks. With the five Paramount Parks, it will have a monopoly on the large amusement parks in Ohio, as well as a first-time presence in Canada and in the South, Futrell said.

"One of the things we did consider in this acquisition, we were acquiring five parks with very little overlap to our existing parks," Witherow said.

The five Paramount Parks are Canada's Wonderland near Toronto; Kings Island near Cincinnati; Kings Dominion near Richmond, Va.; Carowinds near Charlotte, N.C.; and Great America in Santa Clara, Calif.

"I've seen mixed emotions," Futrell said of the acquisition. "People have grown to enjoy the unique personalities of each of the parks owned by Cedar Fair and Paramount. Coaster enthusiasts are concerned about losing the personality."

But they were relieved a company as conscious as Cedar Fair is about capital improvements got the bid, Futrell said.

CBS did not return a call Tuesday for comment.

"When you look at Paramount Parks, they are going to be a part of a company focused on thrill rides and amusement parks," Robertson said.

At the seven parks, $50 million-$60 million has been invested in capital improvements in the last few years, she said.

Witherow said unlike previous acquisitions, the Paramount Parks won't need much work, but that's not to say the transition will be seamless.

Witherow said taking over five parks while they are still open will give Cedar Fair the opportunity to evaluate the season and see what the partnership likes and what it would do differently.

When Cedar Fair bought Geauga Lake in 2004, it was right before the start of the summer season. Other parks were taken over during the season, he said.

Paramount spokesman David Mandt said Paramount is "absolutely" excited about being a part of a company whose primary focus is amusement.

In a press release, CBS wrote, "We're very pleased with the value we received from the sale of this terrific asset," said Leslie Moonves, president and CEO of CBS Corp. "I want to thank the management and employees of Paramount Parks for their contributions to the parks division and to CBS Corp."

CBS announced its intent to sell Jan. 26. Information on how many companies submitted bids was not available Tuesday.

Top three

Top three amusement park companies after the Cedar Fair acquisition of Paramount, based on factors including attendance.

1. Walt Disney Attractions

2. Six Flags

3. Cedar Fair

-- Source: The International Association of Amusement Parks and Attractions, Alexandria, Va.

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