WSJ: Could Disney Target EA for Takeover?

[fitbabits]

The Wall Street Journal, as quoted by MCV, looks at a possible scenario where Disney bids for Electronic Arts. This hypothetical comes on the back of 'plummeting share prices as a result of poor financial results.' MCV estimates that the value of Electronic Arts is now approximately $7.3 billion, a drastic drop from its estimated value of ~$19 billion a few short years ago.

Here's the meat of the Wall Street Journal article:

“Any entertainment company could be interested in EA given continued growth in video game sales, the potential for cross-fertilisation with TV and film storylines, and advertisers' interest in buying space in games.

“Disney makes the most sense. EA's biggest assets include its sports games, such as Madden NFL, which would fit with Disney's ESPN cable network. Disney also could save at least part of the roughly $200 million it spends annually developing its own games.

“Disney could afford it. At June 30, its net debt was $11 billion, roughly 1.2 times Pali Research's estimate of 2008 earnings before interest, tax, depreciation and amortization. Also, Disney's stock has massively outperformed EA's this year. At a 40% premium, EA would cost $7.7 billion excluding the cash.

“Disney would be gutsy to step up during the current economic uncertainty. But it might be better than waiting for better times and paying top dollar.”

As I said, this one really came out of nowhere. I suspect there will be a few kneejerk reactions to this news along the lines 'now we'll see how EA feels', etc. However, I ask you to consider the long-term ramifications of such a deal were it to happen.

Source - MCV (http://www.mcvuk.com/news/32202/Could-EA-be-a-target-for-Disney)

[quidmonkey]

Impeccable timing - things were going far too well over there.

[Cit Phil Cit]

Dead Space! Now with more flowers and Snow White!

[Philonious]

Agreed. I think that EA has been moving in the right direction in the last little while, and it would be a shame if anyone were to interfere while things are getting better. Of course, this doesn't mean anything WOULD change, so I'm pretty neutral.

[Telefrog]

High School Musical: Rock Band Edition.

[Doctor Setebos]

According to The Wall Street Journal, as quoted by MCV, Disney may well be considering a takeover bid for Electronic Arts.Not quite. The entire article is pure speculation. The writer is looking at EA as a company ripe for acquisition, and claiming that Disney would be a good candidate to purchase them. There is no evidence anywhere that Disney is actually considering buying EA.

[Johan]

It's interesting speculation. Many companies are ripe for the taking because of the overall crash in stock values. Companies with healthier balance sheets can look to broaden their presence in particular markets, or enter markets that make sense to their corporate bottom line.

This would be a great idea, in my opinion. Intriguing.

[Norse]

What a nightmare that would be. First EA buys half the industry and then Disney buys EA. EA would be forced to publish teen rated Wii and DS titles only.

[LongStepMantis]

Walt Disney's head is going to conquer the world after all.

I, for one, welcome our bodiless overlord. Not looking forward to every game being about a princess of some various ethnicity though.

[Philonious]

What a nightmare that would be. First EA buys half the industry and then Disney buys EA. EA would be forced to publish teen rated Wii and DS titles only.

'Disney' is a HUGE company that does more than family friendly stuff. They own many other studios, some of which (Miramax) that are known for being controversial. So I don't think it would be horrible content-wise, they just don't put the 'Disney' name on anything that might be considered dodgy.

[fitbabits]

Not quite. The entire article is pure speculation. The writer is looking at EA as a company ripe for acquisition, and claiming that Disney would be a good candidate to purchase them. There is no evidence anywhere that Disney is actually considering buying EA.
Yeah, I edited my post to more accurately reflect the nature of the article in the WSJ.

[Purple Santa]

Interesting speculation. Made me do a "holy spit" kinda thought...even if it is only speculation. I can see it working for Disney. Adding "interactional fiction" to their brand name. Disney certainly could exploit enough of the resources of EA to make it work. If Disney wasn't thinking about it they may want to now...

[MagGnome]

The conglomerate is hungry. It must grow. :p

Seriously, these big media companies just keep getting bigger - as if we didn't all know that. It's unfortunate that they now exert so much control and influence.

The rocky stock market has made several companies ripe for the taking. My employer is one of the few financial services firms that has a healthy balance sheet, and as such we've been picking up other firms that aren't so fortunate. I just hope it leads to me getting a nice raise and bonus in a couple of months. I can dream, right? :p

[mister slim]

Disney has been making some more games acquisitions recently. Pure seems to have been pretty well received. I think I'd prefer EA stay independent though, Disney has a tendency to periodically forget the value of autonomy and start over-managing their subsidiaries.

[JayVe]

I heard that Microsoft is gonna buy Capcom too.

[fitbabits]

I heard that Microsoft is gonna buy Capcom too.
You shut your filthy face, whore.

[JayVe]

Ouch. That hurts. :(

[Doctor Setebos]

Ouch. That hurts. :(I'm sure what he meant to say was "You shut your filthy face, whore, please."

[H.Bogard]

EA's financials weren't poor... they had to delay a hundreds-of-millions-earning game to 2009 because of its respective movie delay. I'm talking Harry Fucking Potter here.