Tuesday, June 27, 2006

Investors turn away with Six Flags flapping in wind

Forget Mr Six’s Pandemonium.
If you’re looking for a terrifying roller-coaster ride that will turn you green, just buy stock in the Six Flags theme park company instead.
Back in the late ’90s the shares rolled all the way up to $40. Click, click, click. And . . .
Aaaaaaaaaaaaaaargh!
Today: $5.83. It plunged another 23 percent on Friday.
And no wonder. Attendance is through the floor. The company says it may breach covenants with the lenders on its $2.1 billion in debt.
And it’s putting 6 of its 30 theme parks up for sale - though Six Flags New England out in Agawam will be unaffected.
It’s less than a year since new management came in to turn things around. Mark Shapiro took over as CEO.
He deep-sixed that creepy old mascot Mr Six.
And he set out a clear strategy: Kick out all the teenagers loitering around the theme parks all day smoking, and woo back families.
“We are driving out a certain segment of the teen population,” Shapiro explained last week. “Those that loiter, those that smoke, those that don’t spend money, those that drive up our security problems.”
Call it “Six Drags.”
Just one problem.
Turns out those were a bigger section of his customer base than he thought.
How big? Latest results: attendance through June 18 this year, across Six Flags’ 30 theme parks, is down nearly 13 percent.
That’s 1.3 million people.
Shapiro thinks the old experience was so bad that he is now talking of the need to “rebuild trust” with families.
As communications boss Wendy Goldberg admits, “when families traditionally came to Six Flags, they didn’t find a family-friendly atmosphere.”
Six out of six for candor. “The parks weren’t as clean as they could have been,” she continued, “there weren’t enough representatives, and they were not as helpful as they could have been.”
Ouch.
Only time is going to tell whether Shapiro can pull this roller-coaster out of its latest death plunge.
A lot depends on people like Mark Kane, the general manager at the New England park. If the company recovers, it’s going to be because he and his staff are making the experience that much better on the ground.
But the prospects aren’t as dismal as Wall Street may think.
Spending per customer is up 14 percent.
Goldberg insists the company faces no cash crunch and “absolutely” no threat of bankruptcy.
And with fuel prices high and many people still nervous about traveling abroad, it’s got to be a good time to market a local attraction.

- - - - -

There was more gloomy reading last week for Globe publisher Richard Gilman and president Mary Jacobus.
Parent company The New York Times Co. revealed its troubled New England Media division, which largely means the Globe, is actually poised to fall behind the Times’ local newspapers network in advertising revenue for the first time in history.
New England Media ad sales fell 6.9 percent in May to $33.6 million. Local papers: up 7.1 percent to $30.3 million.
Five years ago, the advertising sales of the Globe and the Worcester Telegram & Gazette beat that of the Tuscaloosa News, and the Times’ other local papers, by a 40 percent margin.

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