Premier Parks Inc.
Premier Parks Inc.
also known as: six flags founded: 1989
headquarters: 11501 northeast expy.
oklahoma city, ok 73131 phone: (405)475-2500 fax: (405)475-2555 url: http://www.sixflags.com
Premier Parks Inc. propelled itself into the top ranks of the theme park industry when it acquired the Six Flags chain of regional parks in early 1998. Premier Parks also firmly established itself as a global player with its acquisition of the Walibi chain of theme parks. Walibi, based in Brussels, Belgium, owns six parks: three in France, two in Belgium, and one in the Netherlands. With its acquisition of Six Flags and Walibi, Premier proclaimed that it was the world's largest regional theme park company, operating 31 family-oriented regional theme parks around the world. The company distinguishes its parks from those operated by the Walt Disney Company. The Disney theme parks, according to Premier Parks' CEO Kieran Burke, are destination theme parks, which attract fun-seekers from around the world for lengthier stays, while Premier's regional parks usually draw visitors from within a radius of about 100 miles of each park. Disney's five U.S. theme parks are open year-round, while 30 of Premier's 31 parks are open only seasonally.
Measured in terms of paid admissions, Premier's theme parks run a distant second to those of Disney. In 1997, the 31 theme parks now under Premier's control had about 38 million admissions, compared to nearly 90 million at Disney's parks. Burke, a Bronx, New York-born, Harvard-educated lawyer, said the company has no intentions of engaging in a battle to the death with Disney. "We never viewed our long-term goals or performance as competition with Disney," he said.
Premier Parks posted net income of $14.1 million on revenue of $193.9 in 1997, compared with a net of $1.8 million on revenue of $93.4 million in 1996. The company recorded a net loss of $1.0 million on revenue of $41.5 million in 1995, compared with net earnings of $100,000 on revenue of $24.9 million in 1994. First quarter 1998 revenue, reflecting mainly sales of season passes to company parks, totaled $6.8 million, compared with $4.3 million in the first quarter of 1997. These results show no impact from the acquisitions of Six Flags or controlling interest in Walibi. The Six Flags transaction was finalized on April 1, 1998, while the purchase of controlling interest in Walibi occurred at the end of March.
In the wake of Premier's acquisition of Six Flags, analysts seemed bullish about the company's prospects for at least the short term, if not longer. Larry C. Petrella, interviewed by the New York Times, pointed out that although the Walt Disney Company remains the overall leader of the theme park industry, "Premier is growing faster than the whole Disney company." Both Petrella and Jill S. Krutick, an analyst with Salomon Smith Barney, predicted in mid-1998 that the company's stock could trade at $70 or more in the next 12 to 18 months.
Part of the optimism stems from analysts' views that the Premier management team is better equipped to manage theme parks than were Six Flags' previous owners at Time Warner. Ned Zachar, senior managing director of Nationsbanc Montgomery Securities, told the New York Times he believed Premier could improve margins by consolidating operations. Of the price paid for Six Flags, Zachar said, "Premier paid a pretty full price. But Six Flags' cash flow last year was about $160 million, and those parks were under managed, so there are still margins to grow."
Tierco Group Inc., Premier Parks' predecessor company, got into the theme park business almost by accident. Tierco, an Oklahoma City-based developer of commercial property, in 1982 bought Frontier City, a run-down Oklahoma City theme park, with the intention of razing the park to make way for an office complex. The Oklahoma economic slump intervened, putting the local real estate market into a tailspin. Generating more money as a theme park than it would if converted into commercial real estate, Frontier City was spared.
A whole new enterprise began to take shape in 1989 when Tierco's major shareholder took direct control of the troubled company in a financial restructuring. As part of the restructuring, all of Tierco's assets were relinquished to lenders except Frontier City. Soon after assuming control, the new management team embarked on a two-year capital program to reposition and revitalize the 30-year-old Frontier City. By 1990, Tierco had been transformed from a real estate developer into the operator of a single theme park. However, Frontier City was not to remain the company's sole attraction for long. In 1991, the company purchased White Water Bay, a water adventure park in Oklahoma City. The following year the company went out of the hometown market and acquired Wild World Amusement Park, located between Baltimore and the District of Columbia. The park's name was changed to Adventure World in 1994.
The fledgling operator of theme parks changed its name to Premier Parks Inc. in 1994. In 1995, Premier purchased Ohio-based Funtime Parks Inc., acquiring Geauga Lake, Wyandot Lake, and Darien Lake theme parks in the process. Things really took off for Premier Parks in 1996 when the company raised nearly $70 million in an initial public offering. Armed with fresh capital, company officials went searching for new acquisitions. That year alone, Premier purchased Elitch Gardens Amusement Park in Denver, Colorado; Waterworld USA water adventure parks in Concord and Sacramento, California; and Great Escape and Splashwater Kingdom in Lake George, New York.
Premier pursued a vigorous program of expansion into 1997, purchasing Riverside Amusement Park in Agawam, Massachusetts. A secondary public offering in early 1997 raised another $200 million for Premier. In April 1997, the company assumed management of Marine World Africa USA. Later that year Premier acquired Kentucky Kingdom theme park in Louisville and purchased the site of Old Indiana in Indianapolis for redevelopment as a theme park. In the fall of 1997, Premier announced it had negotiated a definitive agreement to purchase Walibi Family Parks in western Europe. In December 1997, the company's stock, which had been traded on the NASDAQ since the company first went public in 1996, began trading on the New York Stock Exchange.
All that had gone before was dwarfed by the company's stunning 1998 acquisition of the Six Flags theme parks from Time Warner Entertainment and an investor group led by Boston Ventures for nearly $1 billion in cash and the assumption of about $900 million in debt. In one fell swoop, the company added to its stable 12 of the most popular regional theme parks in the country. A short time later, Premier finalized its acquisition of Walibi, which operates six theme parks in western Europe—three in France, two in Belgium, and one in the Netherlands.
FAST FACTS: About Premier Parks Inc.
Ownership: Premier Parks Inc. is a publicly owned company traded on the New York Stock Exchange.
Ticker symbol: PKS
Officers: Kieran E. Burke, Chmn. & CEO; Gary Story, Pres. & COO; James F. Dannhauser, CFO; Hue W. Eichelberger, VP & Mgr., Adventure World
Chief Competitors: Premier Parks' major competitors include: Anheuser-Busch; Cedar Fair; Universal Studios; Viacom; and Walt Disney Company.
CHRONOLOGY: Key Dates for Premier Parks Inc.
Tierco purchases a run-down amusement park, Frontier City, with intentions to build an office complex in its place
Tierco's major shareholder takes control and begins to revitalize Frontier City
Tierco's focus turns away from real estate development and into theme parks
Acquires Wild World Amusement Park
Tierco becomes Premier Parks Inc.; Wild World becomes Adventure World
Purchases Funtime Parks Inc.
Premier Parks goes public
Purchases Kentucky Kingdom theme park, Walibi Family Parks, and Old Indiana
Purchases Six Flags theme parks
With its acquisition of Six Flags from Time Warner, Premier purchased not only the 12 Six Flags parks but also the exclusive U.S. and Canadian theme park rights to all Warner Bros. Looney Tunes and DC Comics cartoon and comic book characters. These characters include Bugs Bunny, Daffy Duck, Elmer Fudd, Tweety Bird, Yosemite Sam, Batman, Superman, and others. Premier's management indicated at the time of the acquisition that it planned to use these licensed characters and the Six Flags brand name at most of its existing parks. Most analysts predicted that the use of the characters throughout the full range of Premier's parks should help to boost admissions and merchandise sales at the company's original properties.
In 1997, the Six Flags theme parks generated total revenues of more than $700 million, compared with about $194 million from Premier's parks. In terms of admissions, the Six Flag parks attracted about 27 million visitors, while Premier's parks attendance was less than 11 million. Only one of the Premier parks, Elitch Gardens in Denver, managed to reach 1.5 million in admissions during 1997.
Kieran Burke, Premier's CEO, told the New York Times in June 1998 that while the company saw the opportunity for more acquisitions, it planned to take a timeout of about a year so that the newly acquired properties of Six Flags and Walibi could be integrated into the company's existing operations.
One of the key factors in Premier's meteoric rise to the top ranks of the theme park business has been its firm belief in the importance of adopting a strategic marketing plan for each market in which it operates. The company, with help from Ackerman McQueen, an Oklahoma City marketing firm, makes it a point to know its markets so that it can do what makes sense for each specific market instead of trying to make an overall corporate strategy work everywhere.
Interviewed by The Oklahoman, Gary Story, Premier's president and COO, said, "Every park is unique as it relates to the market it's in. Parks in a tourist clientele, for example, have challenges that we address differently from one in a local market."
Another important factor in Premier's success has been the geographical diversity of its holdings. If its holdings were concentrated in a single region of the United States, for example, prolonged bad weather in that region could hit company revenues hard. As it is, the company has parks scattered across the United States and in western Europe as well, insulating it from weather-related slumps.
In the wake of Premier's stunning acquisitions in early 1998 of the Six Flags and Walibi theme parks, company officials declared it was time to integrate its new holdings into the company's existing operations. In mid-1998, CEO Kieran Burke told the New York Times, "Over the next 12 months, we'll be focused largely on integrating our newest parks."
However, it's unlikely that this will be anything more than a breather for Premier. "Clearly, there are opportunities for more acquisitions," Burke told the Times. The long-term trend will likely see more Premier Parks carefully expanding its hold on the theme park business. One possible avenue for such expansion could come in such foreign markets as Europe and Latin America.
THE THRILL OF IT ALL
They have names like Magnum XL-200, Steel Force, Desperado, Drachen Fire, Mantis, and The Beast. What are they? They're roller coasters. Some of the biggest, baddest roller coasters on the planet. And Six Flags Magic Mountain in Valencia, California (located some 30 miles south of Los Angeles), has one of the most popular, a ride called Superman—The Escape. Built by the Intamin company, it made its debut in 1997. Some roller coaster purists claim that it isn't technically a roller-coaster, but the fact is that it combines the three essential features of any coaster worthy of the name: speed, height, and air time. You are launched almost 400 feet into the air, reach a speed of 100 mph in approximately seven seconds, and experience six seconds of weight-lessness on the ride. All of this is achieved with the use of electromagnets called linear synchronous motors (LSMs). Is it a roller coaster or not? If you make it through the ride without losing your lunch, you probably won't really care.
As of mid-1998, Premier Parks owned and operated 32 theme parks in the United States and western Europe. The company's parks include: Adventure World, located between Baltimore and the District of Columbia; Darien Lake Theme Park and Camping Resort, located between Buffalo and Rochester, New York; Elitch Gardens Theme Park in Denver, Colorado; Frontier City Theme Park and White Water Bay, a water park, in Oklahoma City, Oklahoma; Geauga Lake Amusement Park outside of Cleveland, Ohio; The Great Escape and Splashwater Kingdom in Lake George, New York; Riverside Theme Park, in Agawam, Massachusetts; Waterworld USA water parks in Concord and Sacramento, California; and Wyandot Lake theme park in Columbus, Ohio. Premier also manages the New Marine World Theme Park near San Francisco, California, and is rebuilding a theme park on land acquired in Indianapolis, Indiana, during 1997.
The company's recently acquired Six Flags parks are Six Flags Over Texas and Six Flags Hurricane Harbor in Arlington, Texas; Six Flags Over Georgia in Atlanta; Six Flags Over Mid-America in St. Louis, Missouri; Six Flags Houston, including Six Flags AstroWorld and Six Flags WaterWorld; Six Flags Great Adventure and Six Flags Wild Safari Animal Park in Jackson, New Jersey; Six Flags California, including Six Flags Magic Mountain and Six Flags Hurricane Harbor in Valencia; Six Flags Great America near Chicago; and Six Flags Fiesta Texas in San Antonio. In June of 1998, Premier extended the Six Flags brand name to Kentucky Kingdom, a property it had acquired in 1997. The Louisville property was renamed Six Flags Kentucky Kingdom.
The company is conscious of its debt to the communities in which it operates and endeavors to be a good citizen of those communities. The company annually gives away thousands of free passes to its parks to local agencies that work with underprivileged children. Additionally, the company has been particularly supportive of the Children's Miracle Network.
Premier Parks went international in late 1997 when it acquired a substantial chunk of Walibi S.A., based in Brussels, Belgium. Walibi operates six theme parks in western Europe. By early July 1998, the company had acquired 94 percent of the outstanding stock of Walibi. It said at that time that it hoped to acquire the remaining outstanding stock under a new tender offer to be launched shortly.
SOURCES OF INFORMATION
bunyan, clytie. "acquisitions boost company; parks operator's formula keeps firm growing." the oklahoman, 15 october 1997.
laval, kevin. "shareholder takes control of tierco; some assets relinquished; frontier city is new priority." the oklahoman, 21 october 1989.
martin, stacy. "theme park firm getting big boost from acquisitions." the oklahoman, 15 october 1995.
mcdowell, edwin. "premier parks is the new monster of the midway." new york times, 21 june 1998.
meltzer, mark. "six flags to go on spending ride." atlanta business chronicle, 1 june 1998.
"premier parks agrees to buy six flags from time warner entertainment and boston ventures for $1.9 billion." business wire, 9 february 1998.
"premier announces successful conclusion to walibi tender." business wire, 2 july 1998.
"premier parks inc." hoover's online, 1998. available at: http://www.hoovers.com.
"premier parks officials keep low profile." the oklahoman, 17 february 1998.
"premier parks reports first quarter results." business wire, 7 may 1998.
"theme park crossing new frontiers." the oklahoman, 26 april 1998.
For an annual report:
write: administration investment office, premier parks inc., 11501 northeast expy., oklahoma city, ok 73131
For additional industry research:
investigate companies by their standard industrial classification codes, also known as sics. premier parks' primary sics are:
7996 amusement parks
7999 amusement and recreation, nec