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SeaWorld Discloses ‘Risk Factors’ in IPO

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SeaWorld Discloses ‘Risk Factors’ in IPO

Frpm Earth in Transition
February 2013

SeaWorld Sea World Shamu orca captivity
A "Shamu" show at SeaWorld San Diego

SeaWorld Entertainment, apparently under pressure from the Securities and Exchange Commission, has filed a revised prospectus for its IPO on the New York Stock Exchange. Corporations preparing to go public on the stock market are required to let potential investors know the "risk factors" that may be involved. And SeaWorld wasn't too keen on letting investors know how public opinion could be starting to turn against these circus shows.

On his blog, David Kirby, author of Death at SeaWorld, writes:

Among the risks now specified are the 2010 death of Orlando trainer Dawn Brancheau, the ensuing OSHA violations and ongoing appeals process, and the widespread publicity it generated, including the book Death at SeaWorld and [Gabriela Cowperthwaite’s] documentary Blackfish, which recently premiered at the Sundance Film Festival and will hit theaters this summer.

The original prospectus admits that “While we maintain strict safety procedures for the protection of our employees and guests, injuries or death, while rare, have occurred in the past." But there's no mention of the death of Brancheau or the many other injuries that have occurred at SeaWorld's marine circuses.

The revised prospectus now adds the following:

For example, in February 2010, a trainer was killed while engaged in an interaction with a killer whale. Following this incident, we were subject to an inspection by the U.S. Department of Labor’s Occupational Safety and Health Administration (OSHA), which resulted in three citations concerning alleged violations of the Occupational Safety and Health Act and certain regulations thereunder. We have appealed certain of these citations and the appeal process is ongoing. In connection with this incident, we reviewed and revised our safety protocols and made certain safety-related facility enhancements. In addition, this incident has been the subject of significant media attention, including television and newspaper coverage, a documentary and a book, as well as discussions in social media.

Kirby delves deeper into the question of investing in cruelty in an earlier post, where he writes:

Investing in the captivity of highly intelligent killer whales for public amusement carries with it considerable risks and drawbacks - not just financially, but ethically and morally as well.

... Many captive orcas die young despite extraordinary efforts to keep them healthy. Trainers routinely stuff the gills of food fish with antibiotics, antacids and vitamins, and inject them with fresh water, because frozen and thawed fish loses nutritional value and fresh water content. Some orcas receive up to 80 pounds of gelatin per day to combat dehydration.

SeaWorld has already conceded that:

"Incidents or adverse publicity concerning our theme parks" could possibly "negatively impact our revenues and profitability." Indeed, any injuries "involving the safety of guests and employees, and the media coverage thereof, may harm our brands or reputation," it cautioned. "Such incidents have occurred in the past and may occur in the future." Social media only "compounded the potential scope of the negative publicity."

Other risks to your investment are the potential exposure of park animals to infectious diseases, and lawsuits by activist groups alleging that "we do not properly care for some of our marquee animals" the filing said.

And there is one other intangible and highly unpredictable factor. "Changes in consumer tastes and preferences for entertainment and consumer products could reduce demand," the filing warned, "and adversely affect the profitability of our business."

Public opinion has a way of swinging quite dramatically. And SeaWorld may not even be aware of how close to the edge the American public could be in terms of turning its back on circus shows, whether under big tops or in marine stadiums. But the company does seem to be aware that these "risk factors" could impact them quite negatively – which is why they didn't want to include them on the list in the first place.