U.S. media giant Viacom Inc. is considering selling its Paramount Parks division, operations that include Canada's largest theme park, Paramount Canada's Wonderland.
The sale could fetch as much as $1-billion (U.S.), industry observers say.
"We're in the early stages of looking at potential opportunities for doing something with Paramount Parks, which we also see as a non-core asset," Tom Freston, Viacom's co-president and co-chief operating officer, said in a conference call yesterday with analysts and reporters. "We've received a lot of unsolicited interest and we expect to have more to say about this as the year goes on."
New York-based Viacom -- also the parent of television channels CBS and MTV, movie studio Paramount Pictures Corp. and publisher Simon & Schuster Inc. -- has said it plans to shed so-called non-core operations, earmarking the proceeds to buying back shares and kick-starting profits.
Last fall it disclosed that it will sell its Canadian cinema chain Famous Players Inc., which reportedly comes with a price tag in the $400-million range. Management said yesterday that it expects to complete the sale of the Toronto-based chain during the first half of this year.
Running five large venues, Paramount Parks is North America's fourth-largest operator behind Walt Disney Co., Six Flags Inc. and Universal Studios Inc. Sales in the Paramount Parks division rose 9 per cent last year, making it one of Viacom's best performers.
The operations could sell for between $800-million and $1-billion, according to industry watcher Dennis Speigel, the president of consultancy International Theme Park Services Inc. He said in an interview from his office in Cincinnati that Viacom has been shopping the division around for a couple of weeks.
There are six major operators of theme parks in North America, which account for nearly 75 per cent of all theme park receipts. The other big five are under pressure to improve their own balance sheets and likely won't bid on Paramount, Mr. Speigel said. He expects one of the large private equity companies to put in an offer.
"In my opinion, the way to go with this is to take it private," he said, adding that while growth within the industry has been flat in recent years, operators have stable revenues -- which large buyout firms like Kohlberg Kravis Roberts & Co., Blackstone Group and Apollo Management crave.
Canada's Wonderland is one of the jewels in Paramount Parks' crown, and any buyer would likely want to hang on to that property, Mr. Speigel explained. "That has turned into a world-class park. It's a very good product."
Canada's Wonderland, located on 379 acres of land just north of Toronto, opened in 1981. Attendance at the park has grown substantially in recent years, pushing it above the three million mark for the first time in 2004. With 3.4 million visitors last year, it is now the 16th best-attended theme park in North America, just behind Ohio's Paramount King's Island and California's Knott's Berry Farm.
A spokeswoman for Maple, Ont.-based Canada's Wonderland would not comment.
Paramount got into the theme park business in 1992, spending about $400-million on Kings Entertainment Co., an American theme park operator that owned a 20-per-cent stake in Canada's Wonderland.
In 1993, Paramount paid $66.1-million (Canadian) to buy out two Canadian developers -- JDS Investments Ltd. and Bramalea Ltd. -- that owned 80 per cent of Canada's Wonderland.
Disney's Magic Kingdom -- part of the Walt Disney World complex in Orlando, Fla. -- is the industry's biggest player, with 15.1 million patrons last year.