Bonds, Reputation Drop To Junk Status
Standard & Poor’s lowered SeaWorld Entertainment’s credit rating Thursday amid negative publicity over its treatment of killer whales.
The move by the Wall Street rating company came one day after SeaWorld reported lower-than-expected earnings for the second quarter, prompting a record drop in its share price. The company operates SeaWorld in San Diego and other aquatic theme parks, which are under increasing pressure from animal rights groups and the movie Blackfish.
In response, Standard & Poor’s dropped Orlando, Fla.-based SeaWorld’s corporate credit rating to BB- from BB, pushing the rating further below investment grade, also known as junk status.
“The negative outlook reflects our belief that the company faces significant challenges regarding reputation risk and potential improvements in operating performance beyond 2014,” Standard & Poor’s said in a statement.
Standard & Poor’s cited “negative media reports that have specifically targeted the company’s use of orca whales for entertainment purposes” as contributing to lower attendance and spending at the parks.
SeaWorld officials declined to comment. Goldman Sachs on Thursday lowered earnings expectations and projections for SeaWorld, citing the orca controversy, as well as steep competition from other theme parks. SeaWorld’s “long-term turnaround is unclear to us,” Goldman Sachs said in a report. SeaWorld officials had previously attributed lower attendance numbers to bad weather, higher ticket prices and a shift in the timing of Easter this year.
But SeaWorld conceded in its earnings report Wednesday that negative publicity over charges that it mistreats its killer whales has hurt attendance.
The criticism of SeaWorld gained momentum last year with the release of a documentary, “Blackfish,” that accused the theme park company of mistreating the orcas featured in its shows.
In midday trading Thursday, SeaWorld stock continued to slide, falling almost 5% to $17.97.