The lights are on
After failing to find a buyer for its controlling shares in Activision
Blizzard, Vivendi may take out a gigantic loan in the publisher's name for some
much-needed financial relief.
According to the Financial
Times (via Reuters),
Vivendi will gain new managerial powers over Activision Blizzard tomorrow, the
closing date of the 2007 Activision/Vivendi merger. The merger gave Vivendi a
61-percent stake in Activision.
Speaking with Joystiq,
Wedbush Securities analyst Michael Pachter describes a potential scenario in
which Vivendi can now take out a massive loan in Activision's name and then pay
itself an equally sizable dividend. "Borrowing of $5 billion would permit
a dividend of $8.5 billion," Pachter states. "As the holder of 61 percent of
Activision's common stock at March 31, 2013, we estimate Vivendi would receive
approximately $5.2 billion in cash, easing its mounting debt concerns."
The move would leave Activision with a mountain of debt to overcome, while Vivendi
uses the payoff to get its own finances in order.
In May, Activision announced a strong
financial start to 2013, but warned that the second half of the year would
be challenging due to competing IPs. The financial move Vivendi is
reportedly considering could have a serious impact on Activision's outlook for
the year, but that may be a trade off Vivendi is willing to take.
[Source: Financial Times, via Reuters Additional information via Joystiq]
Our TakeWhile some gamers would celebrate any financial hardship
that Activision may find itself in, I think today's report is terrible news. Activision's latest earnings call reiterated the company's strategy to avoid
making risky decisions. Gamers may decry the company's reliance on annual
sequels, but those games – which still provide plenty of enjoyment to players –
provide a steady source of income that keeps hundreds of talented programmers
and artists in business. Despite Activision's efforts to avoid it, the company
may get stuck with a huge amount of debt, through little fault of its own. Only
Vivendi stands to gain from that scenario.
Email the author Jeff Marchiafava, or follow on Google+, Twitter, and Game Informer.
Activision/Blizzard may rely on the annually Call of Duty games to keep talented programmers and artists in business, but when the company is making billions in profit there should be WAY more jobs. Immoral business practices to keep the least amount of workers only to increase profit margins.. here's an idea Activison. There should be many many more people employed in businesses like these but there isn't because profit margins are the only thing these greedy companies care about.
Im not a big activision fan, but I don't like seeing things like this happen to anybody in the industry. This could have disastrous consequences in the future.
They should do a kickstarter
It seems like this should be some kind of illegal.
Why would a bank make such a loan? If Vivendi couldn't find a buyer doesn't that make activision look like a risk? Don't the banks have enough houses not worth the debt? Why would they want a game company, those seem to fail even more often than mortgages.
This is bull but, now i see why major companies buy their stock back.
They should just release a new COD every month with 1 or 2 new perks and guns. Idiots would still buy it.
Maybe if they had let Diablo 3 and StarCraft 2 go down in price they would have sold a lot more copies. I didn't buy either of those games due to wanted to wait till they went down in price.. I am still waiting. Every other game went down in price but those two titles. I just recently saw like a $10 reduction but now its too late for me no longer interested.
What the 1 game they keep putting out a year isnt keeping them afloat? (Call of Duty) Just throw in cash shops for all your single player and multiplayer games like EA does and viola, World Of Warcraft is doing it soon why not the rest, this is what happens when you lay down your entire business around 2 game WoW and COD when they release nothing else worth playing to other types of gamers and groups. I don't play any of the COD games or WoW probably lot of others don't either.
How is that fair? They take out a loan in Activision's name to pay off their debt, and then leave Activision with all of their debt from their poor decision making? I'm confused ... The business world is so conniving and corrupt
Its not Activision thats having the problem, its the other branch Vivendi which is more television, movie and music based that are going through the issue.Its as if you're family was in financial crisis and took a a large loan in your little siblings name to clear the debt and left the kid with the balance.
Damn. Kind of poop that Activision would have to take on a huge debt for another company that can't manage itself. CoD is one of the best franchises around I would hate for it to be taken over by a lesser company.