Just when you thought that a reopening date for Walt Disneyin (NYSE: DIS) the original theme park would never land – got it, Neverland? – there is finally hope for California’s Disneyland resort. A new bill under consideration at the state legislature would allow major theme parks and attractions to be treated in the same way as their smaller rivals and give them greater flexibility to return to business.
This does not mean that you and your children will line up for Mr. Toad’s Wild Ride or Soarin ‘Over California soon. COVID-19 case counts will still have to drastically improve from current levels to reach the level within which Disney owned parks, Six flags (NYSE: SIX), Comcast (NASDAQ: CMCSA), Cedar Fair (NYSE: FUN), and SeaWorld Entertainment (NYSE: SEAS) in Southern California it would be allowed to reopen under the new legislation. There will also be severe restrictions in terms of park capacity and what guests can do by clicking on the entrance turnstile. However, even a little bit of Disneyland can go a long way – and for employees, theme park fans and shareholders, it will have to be done now.
The encouraging news was enough to send shares of Cedar Fair, Six Flags and SeaWorld 5% to 10% higher on Thursday. Disney and Comcast grew by only 2%, but they are diverse media companies, and theme parks are not their main breadwinners today.
Image source: Disney.
A cautious pandemic strategy
Disneyland, Six Flags Magic Mountain and Comcast’s Universal Studios Hollywood have been closed for almost 11 months. SeaWorld San Diego reopens on Saturday, but like an accredited zoo – visitors will only be able to enjoy their animal exhibits and select outdoor areas. It’s a very different scene from Florida, where Disney, Comcast and SeaWorld have returned to operating their parks since June or July, with far fewer restrictions than their sites in California will face later this year.
While there is no way of knowing what the pandemic situation in California would have been like if the state government had chosen a less rigid approach, its abundance of caution when it comes to theme parks does not seem to have paid off. During the country’s autumn and winter coronavirus peak, cases of COVID-19 per capita in California for some time increased more than Florida’s levels. The Golden State’s unemployment rate is now 290 basis points higher than that of Florida. In Florida, it appears that companies have successfully reopened their attractions, saving some jobs in the process.
In an ideal world, none of this will matter. If vaccination rates go up, it could be just a matter of months before Disneyland and its smaller competitors are leaving again in Southern California, regardless of which category they belong to. The proposed new bill may be a backup plan, but despite the recently fluctuating stock prices of companies, there is still a lot of work to be done.
Six Flags’ stock price peaked at 52 weeks on Thursday, and SeaWorld Entertainment is just a good day away from trading to achieve the same feat. Both companies are fundamentally worse off than they were a year ago, when it did not seem that the pandemic would be so brutal for their financial results. Cedar Fair started in 2020 and will have a lot of work to do to attract customers back later this year. Disney canceled its annual pass program last month, so it will also have to repair some fences with fans as soon as it can start operating its parks at full capacity again.
California’s parks may be nearing reopening, but there will be many steps on the way back.