Why Walt Disney Co. Thrives While SeaWorld Entertainment Inc. Dives

By Markets Fool.com

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Disney's Florida theme park. Photo: Disney.

When it comes to live entertainment and theme parks, there's no company that comes even close toDisney(NYSE: DIS), both in the U.S. and internationally. These parks posted record visitor numbers last year and even had to turn guests away during the 2014 holiday season, as they were at capacity. Profits were up for this segment around 20% during 2014 year over year. All in all, strong theme-park results helped push Disney's stock up nearly 30% in the past 12 months.

By contrast,SeaWorld Entertainmenthas suffered through a lot of bad publicity and financial hardships over the past few years, and in 2014 there were 1 million fewer visitors to the parks than in 2013. SeaWorld's stock stock has suffered as a result, down nearly 50% in the past 12 months.

Both companies have at one point been iconic images of American theme parks, so why have Disney's theme parks continued to thrive while SeaWorld dives?

Animals make poor employees

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One of the largest and most famous American circuses still performing, Ringling Brothers and Barnum & Bailey is another recent example that animals don't make good employees. This circus, having not changed much in its 133-year history, still uses animals in its three-ring act, much as it always has. In recent years, groups such as PETA have become even more vocal in their protests outside the sites where the circus is held. Even more importantly, these groups have gathered large followings of like-minded people on the Internet, where news stories and animal-related topics spread quickly from activists to the general public.

Because of more widespread community discontent about the use of animals, Ringling Brothers and Barnum & Baileyhas officially announced that it will begin to phase out its elephant act, with no elephants in any performance by 2018. The animals will be retired to the company's private estate in Florida that's been used for breeding and raising the company's 43 elephants. The company has said that it will continue to take care of the elephants at this estate, even at a potentially high cost, considering the animals have a life span comparable to humans.

It comes down to perception and willingness to change

Circuses around the world have used animals in their performances for many decades, but the rise of public discontent over these animals' welfare, along with the ease with which information about companies' animal-care practices can be made public and widely distributed, have made it hard for companies with performing animals to continue using them without attracting negative attention.

Source: Blackfishmovie.com.

One of SeaWorld's biggest struggles recently has been dealing with the public-relations nightmare that the BlackFish film brought to the company. The documentary, released last summer, portrayed SeaWorld as a violator of both animal and human rights.

SeaWorld is still hoping to turn around community perception with campaigns about how using these animals increases conservation awareness in the community, about how well their animals are sourced and treated, and about how safe the animal trainers are. The company is starting a more serious and structured publicity campaign, led by interim CEO David D'Alessandro.

However, according to Dennis Speigel, president of international theme park services, if the company wants to change community perception, it will need a total "reconstitution of their parks," something SeaWorld hasn't been good at. The company's main feature, shows with performing orcas, is pretty much its one trick and has been so from the beginning. To get away from that focus would pretty much mean building an entirely new theme park.

By comparison, Disney is constantly innovating with better attractions
What helps Disney to consistently grow visitors is by constantly adding new attractions, for a variety of audiences. For instance, the company was able to use its Frozen characters to add new attractions to its theme parks in 2014.

Now the company has partnered with James Cameron to construct an entire attraction based on the movie Avatar, which will allow guests to feel as if they're in Pandora, the world of the Avatar characters. Then with Disney's acquisition of Lucasfilm, you can bet there will be a lot of new attractions at the parks based on the Star Wars movies, catering to a completely different audience from those interested in Frozen.

Foolish final thoughts

So as Disney theme parks continue to thrive, Disney's share price will continue to reflect that growth. On the other hand, there still doesn't seem to be much upside for struggling SeaWorld, and there's a good chance its share price will continue to fall further. Even if the company can begin to turn around its public perception, or even start completely new forms of entertainment that don't use animals, the company's financials are still bleak, with far too much debt, too little cash, and no real growth prospects on the near horizon to boost cash. For theme-park goers and investors alike, it looks as if Disney will be the winner for a long time to come.

The article Why Walt Disney Co. Thrives While SeaWorld Entertainment Inc. Dives originally appeared on Fool.com.

Bradley Seth McNew owns shares of Walt Disney. The Motley Fool recommends Walt Disney. The Motley Fool owns shares of Walt Disney. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.