SeaWorld shares fall after dividend cut

SeaWorld shares opened sharply lower Tuesday after the company said it is cutting its dividend by more than half and then eliminating it altogether to raise cash for share repurchases as it grapples with a future that will phase out killer whale shows.

SeaWorld Entertainment (SEAS) shareholders will receive a cash dividend of 10 cents a share on Oct. 7, down from the 21 cents a share that it had been paying. The board said it decided to suspend its quarterly dividend from then on. SeaWorld Entertainment operates the SeaWorld marine parks and other venues.

Investors reacted by dropping the price of SeaWorld shares which had been trading close to $12.70 a share to $11.77, but they have started to rebound since. At midmorning trading, they were at $12.22, down 3.7%.

"The Board has determined that, consistent with the financial discipline pillar of the company's strategy, the best way to support the long-term development of the business and deliver value to shareholders is to suspend future dividends at this time," SeaWorld said in a statement Monday. "Doing so will give us the greatest flexibility to deploy capital to the opportunities that offer the greatest long term returns to our shareholders."

Instead, SeaWorld will use the funds that would have gone to the dividend for "opportunistically buying back SeaWorld shares."

SeaWorld announced in March that it will end orca shows in San Diego next year, and San Antonio and Orlando in 2019. Those killer whale shows had been among the parks' most popular attractions, but SeaWorld endured an avalanche of bad publicity surrounding the documentary Blackfish, which centered on the whales' capture and life in captivity.

Attendance has continued to fall. In the second quarter, attendance was down 494,000 guests, SeaWorld told investors in August. But it said the decline wasn't due to adverse publicity. Rather, the company blamed it on factors like a shift in holidays this year, fewer Latin American visitors at the Florida parks and the impact of Tropical Storm Colin.

Revenue was down to $371.1 million, from $391.6 million the year before, and net income fell to $5.8 million, from 17.8 million in the same quarter last year.