SOMETHING FISHY

Lawsuit: SeaWorld Tried to Spin ‘Blackfish’ as Good for Business

Meanwhile, in private, executives complained about ‘SeaWorld stink’ and encourage employees to infiltrate PETA, according to a class-action lawsuit.

Gerardo Mora

When Willie Nelson canceled a performance at SeaWorld Orlando, the theme park’s executives were apparently the last to know.

“This whole fucking thing pisses me off,” Fred Jacobs, then SeaWorld’s VP of corporate communications, fumed in a Dec. 3, 2013 email.

“What relentless amateurism we’ve shown in booking these fucking people and managing the whole fucking ... mess,” Jacobs added in the frustrated missive. “All of this could have been easily avoided.”

Executives were desperate to turn the tide, as musical acts like Nelson and the Barenaked Ladies bowed out of SeaWorld Orlando’s annual concert series, “Band, Brews and BBQ,” amid the backlash over the documentary Blackfish.

After the anti-captivity flick’s debut, SeaWorld scrambled to save its rapidly tanking image. In private, the chain allegedly asked employees to storm online polls about Blackfish; emailed 50 film critics with talking points before they wrote reviews; and deployed company spies to infiltrate animal rights groups.

But in public, SeaWorld misled investors on Blackfish’s impact on revenues, according to a class-action lawsuit filed by shareholders.

In January 2014, then-President and CEO Jim Atchison announced the company expected record revenues for 2013, despite a global uproar over the allegations in Blackfish.

“The success of the SeaWorld parks in 2013 suggests that the extraordinary experience offered in these parks is as meaningful today as at any point in our history. But as strong as last year was for us, we are looking forward to another great year in 2014,” he said in a statement.

Atchison echoed the sentiment during a fourth-quarter earnings conference call, when an analyst asked what impact Blackfish might have business, the lawsuit says. “A matter of fact, the movie in some ways has actually made perhaps more interest in marine mammal parks, and actually even about us,” he said.

And yet other emails, released as part of the ongoing federal lawsuit, suggest executives knew the company was in trouble despite their rosy claims to the contrary. Jacobs even seemed to mock SeaWorld’s panic over preserving Nelson and the rest of the musical lineup, calling their problem “SeaWorld stink.”

“To wit: ‘Willie, on our best day SeaWorld is controversial, but right now we’re being attacked from all sides. We are positively radioactive. If you don’t want SeaWorld stink on you, we have to know now and we’ll walk away,’” Jacobs continued.

“And then the kicker: ‘Oh, yes. Willie and his people will says [sic] it’s a scheduling conflict.’”

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SeaWorld learned of Nelson’s cancellation not through the performer himself, but rather via a CNN report, the emails suggest.

“God we look like idiots,” Jacobs concludes.

Last month, a federal judge granted class-action status to the lawsuit, which lists two pension funds as lead plaintiffs. SeaWorld Entertainment Inc. and former majority owner the Blackstone Group are among the defendants.

The Arkansas Public Employees Retirement System and a teachers’ pension fund in Denmark suffered more than $4 million in losses from SeaWorld’s tanking stock, court filings state. Hundreds, if not thousands, of investors who purchased stock between Aug. 29, 2013 and Aug. 12, 2014 were damaged by SeaWorld’s conduct, the complaint says.

Blackfish made a splash soon after the film premiered at Sundance in January 2013 and was acquired by CNN and Magnolia Pictures. Its theatrical release six months later unleashed a social media torrent against the theme park.

A SeaWorld spokeswoman said the company does not comment on pending litigation. “We continue to focus on our mission to inspire people to protect animals and the world’s oceans,” Aimée Jeansonne Becka wrote in an email to The Daily Beast.

The class-action designation comes amid probes into SeaWorld by the Department of Justice and the Securities and Exchange Commission.

This summer, SeaWorld announced the DOJ and SEC had issued subpoenas over the company’s “disclosures and public statements” made before August 2014, including those regarding Blackfish. “The Company has cooperated with these government inquiries and intends to continue to cooperate with any government requests or inquiries,” SeaWorld said in SEC filings in June.

The DOJ has intervened in the class-action lawsuit, too, requesting a delay in depositions as the feds pursue a criminal probe. Michael M. Anello, U.S. District Judge for the Southern District of California, granted the stay in September. Last week, Anello extended the stay until April 2, 2018, records show.

“Because of the important interest in maintaining the integrity of criminal investigations … such intervention is appropriate and in the public interest,” acting chief for the DOJ’s Fraud Section, Sandra Moser, wrote in court papers.

Meanwhile, the shareholders’ lawsuit accuses former CEO Jim Atchison of “insider selling,” alleging he “personally sold 154,000 shares” of SeaWorld common stock in a three-month period from Dec. 2, 2013 and March 6, 2014 and “yield[ed] proceeds of over $4.6 million.” Five months later, SeaWorld’s stock tanked when the company admitted revenues were down over negative publicity.

Atchison’s attorneys did not return requests for comment.

Yet, when asked about Blackfish’s impact on business, Atchison told The Wall Street Journal, “I scratch my head if there’s any notable impact from this film at all, and I can’t attribute one to it.” The CEO even suggested that Blackfish had positively impacted the brand, the lawsuit says.

“Ironically, our attendance has improved since the movie came out,” Atchison added in the November 2013 interview.

Blackfish focused on Tilikum, a 12,000-pound orca who caused the deaths of three people, including his SeaWorld trainer Dawn Brancheau. The 40-year-old was killed when Tilikum dragged her into his pool and thrashed her underwater. An autopsy revealed she died of drowning and blunt force trauma.

The film exposed the park’s questionable treatment of Tilikum and fellow captive whales, and spurred a seismic shift in public attitudes on using marine animals for entertainment. (Tilikum died in January after spending 34 years in captivity. He was snatched near Iceland in 1983 when he was only 2 years old.)

It also spelled the end of SeaWorld’s orca shows, which for 50 years served as the company’s primary attraction across three amusement parks in Orlando, Florida; San Diego, California; and San Antonio, Texas.

SeaWorld went public in April 2013, months after Blackfish premiered at the Sundance Film Festival. The documentary would soon be trending on social media, extolled by celebrities (who asked fans to boycott the theme parks), and targeted by PETA campaigns.

Still, SeaWorld “failed to mention the film by name” in its initial public offering, the lawsuit says. “SeaWorld offered only a generalized reference to the fact that accidents or adverse publicity ‘may’ potentially harm SeaWorld’s reputation, attendance and business at some point in the future,” court papers allege.

Indeed, the theme-park chain blamed “unprecedented attendance declines” on anything but Blackfish, the complaint states. The company, in statements to investors, said adverse weather conditions, holiday and school schedules, and pricing strategies led to lackluster ticket sales, court papers allege.

But while SeaWorld blamed bad weather for sinking ticket sales, reports showed that competitors in Florida and California—Disney and Universal theme parks—enjoyed spikes in attendance figures.

SeaWorld tried to counteract the “Blackfish effect” by investing heavily in advertising, as well as holding meetings where SeaWorld employees were allegedly told to dispute the film and tell friends and family “it was fake.”

The complaint highlights one former employee’s interview with The Dodo on the park’s preemptive tactics. “They were feeding us lines,” Sarah Fischbeck said, adding that SeaWorld’s response to the film was “extremely hush-hush.”

A SeaWorld spokeswoman called Fischbeck’s claims “a complete distortion of the facts” and said that if Fischbeck had qualms, she “had a variety of ways to express grievances, file complaints and/or report concerns.”

Despite SeaWorld’s denials, the company “was concerned enough about the negative publicity from the film to hire publicist 42West to lead a public relations blitz against” the documentary, the lawsuit says.

In July of 2013, anticipating the film’s theatrical release, Jacobs contacted 50 major film critics to “discredit” Blackfish, the complaint says. (SeaWorld’s critiques prompted the film's director, Gabriela Cowperthwaite, to respond with a point-by-point defense.)

SeaWorld enlisted employees to pose as animal-rights activists, too. The spy games began as early as November 2013, at the Macy’s Thanksgiving Day Parade, in order to infiltrate PETA and other groups opposed to orca captivity.

The Daily Beast previously reported on the espionage, which even targeted an academic paper on killer whales when it was published. SeaWorld came clean about the spy tactics last February, when CEO Joel Manby said the company’s board of directors demanded an end to the undercover work. “This activity was undertaken in connection with efforts to maintain the safety and security of employees, customers and animals in the face of credible threats,” Manby said in defense of the spy program.

Emails exhibited in the lawsuit seem to bolster reports that SeaWorld was finessing online opinion polls conducted by CNN, the Orlando Sentinel and the Orlando Business Journal, where a reporter discovered that 54 percent of the votes came from a single IP address owned by SeaWorld Entertainment.

“The [Orlando] Sentinel poll is still running. Let’s keep flooding it,” Nick Gollattscheck, a former SeaWorld spokesman, wrote in a Dec. 24, 2013 email to employees.

“Have also heard if you click ‘no,’ them [sic] click on ‘vote’ multiple times, it will count multiple votes. Like a hundred or so,” Gollattscheck continued. “Happy holidays and keep voting.”

He concluded, “Ho ho vote.”

That December, SeaWorld’s CEO began disposing of his stock in the company.

According to the lawsuit, Atchison and fellow defendants were “motivated to artificially inflate SeaWorld’s stock price ... in order to benefit their own personal financial situation with the proceeds from insider stock sales.”

Atchison sold a large part of his stock in eight sales between Dec. 2, 2013 and March 6, 2014, “while in possession of material inside information concerning the enduring impact Blackfish was having on the Company’s attendance,” the lawsuit claims.

These sales were “suspicious” because the proceeds surpassed Atchison’s disclosed 2013 compensation of $2.5 million, and because they disposed of 20 percent of Atchison’s total holdings, the complaint says.

Five months later, SeaWorld finally admitted bad press had battered profits. But even then, executives didn’t mention Blackfish by name. Instead, the company pointed to California legislation—inspired by the documentary—that proposed banning orca shows and breeding. After the disclosure, SeaWorld’s stock plummeted 33 percent to $9.25 per share. (The so-called “Blackfish” bill passed last year.)

The lawsuit also says SeaWorld’s then-owner, The Blackstone Group L.P., sold off 18 million shares of SeaWorld common stock in December 2013. The firm sold 19.9 million shares in the IPO months before—a trend that would continue until this year, when Blackstone sold its stake to a Chinese investment group.

In response to the lawsuit, a Blackstone spokesman said, “We believe this suit is wholly without merit and that our actions were proper in all respects.”

Flailing to revamp its image, SeaWorld launched a new ad campaign in 2015. One video featured the park’s head veterinarian, Chris Dold, who declared, “So don’t believe what PETA and Blackfish are saying. Our killer whales live lives just as long as killer whales in the wild.”

That year, SeaWorld also proposed a $100-million renovation aimed at doubling the size of its orca tanks at SeaWorld San Diego. The California Coastal Commission approved the plan, with the caveat that it end its orca breeding program.

In response, SeaWorld issued a statement expressing disappointment in the commission’s breeding limitation, before ultimately withdrawing its proposal.“Breeding is a natural, fundamental and important part of an animal’s life,” the company said, “and depriving a social animal of the right to reproduce is inhumane.”

In March 2016, SeaWorld announced it would end all breeding of its 19 captive orcas and phase out its killer whale performances.

“We understand some customers are upset and you may feel betrayed, but in a simple way, the data and trends showed it was either a SeaWorld without whales or a world without SeaWorld,” President and CEO Joel Manby told fans in a webcast.

When one participant said SeaWorld caved to critics, Manby said the company had no choice.

“I’ve heard the same thing,” Manby said. “We didn’t cave to PETA or any activist organization. We changed because society’s mindset was changing. The truth was our customer base was shrinking and more and more people distrusted us.”