Vivendi May Siphon Funds From Activision Blizzard

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Vivendi May Siphon Funds From Activision Blizzard

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As it has failed to sell Activision Blizzard, Vivendi is said to be considering a raid on the publisher's capital.

France-based multinational corporation Vivendi is the majority shareholder in prominent videogame publisher Activision Blizzard, with a 61% stake in the company. Vivendi will gain the power to forcibly extract cash dividends from Acitivsion Blizzard as of Tuesday, and may issue a "cash grab" which could bring the publisher to a net debt of over $400 million.

Despite Activision Blizzard's relative success, Vivendi's share price is sliding, and it is constantly looking to sell off the publisher. The problem, of course, is that no-one is willing to shell out the cash to buy the largest videogame publisher in the world. This has forced Vivendi to look into alternate ways to extract some extra cash from Activision Blizzard, which leads us to this most recent "cash grab."

In the past, Vivendi has had to gather support from Activision Blizzard's directors for such a huge siphon of funds, but this agreement expires on Tuesday. Vivendi and Activision Blizzard have also discussed a tender offer that would partially cover Vivendi's stake, and be funded by the Activision Blizzard's available cash.

Vivendi is huge megacorporation that has stakes in various different industries, including oil, music, and videogames. It is looking to reduce its exposure to telecoms, and focus more on media businesses.

Last year, Vivendi forced an executive onto the Activision Blizzard board of directors, but still doesn't seem happy with the videogame company's performance. Activision Blizzard publishes games in the Warcraft and Call of Duty franchises, arguably the two most successful franchises in the history of videogames.

Source: Reuters via VG24/7

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Why the heck would you want to sell something that makes you so much money? Like you said, they make what may very well be the 2 most profitable game franchises there are out there.

Aeshi:
Why the heck would you want to sell something that makes you so much money? Like you said, they make what may very well be the 2 most profitable game franchises there are out there.

Probably to make up for massive losses in other fields. I guess that the regular funds coming from Activision-Blizzard aren't enough to cover their losses.

Doom972:

Aeshi:
Why the heck would you want to sell something that makes you so much money? Like you said, they make what may very well be the 2 most profitable game franchises there are out there.

Probably to make up for massive losses in other fields. I guess that the regular funds coming from Activision-Blizzard aren't enough to cover their losses.

But wouldn't it make more sense to cut the losses in those other fields? why would they hurt their money printer?

That sounds kind of scummy, but since it's happening to Activision that's a good thing :D

Aeshi:
Why the heck would you want to sell something that makes you so much money? Like you said, they make what may very well be the 2 most profitable game franchises there are out there.

It appears that Activision Blizzard actually doesn't make money for Vivendi, except through dividend payments. That's how I read it, anyway.

viggih7:
But wouldn't it make more sense to cut the losses in those other fields? why would they hurt their money printer?

Maybe they suspect it won't continue printing them money for much longer? WoW gets a shot in the arm with each new expansion, but there can be no doubt that it's in decline and won't be around forever. Diablo and Starcraft are successful enough, but one game every 12 years in a franchise isn't exactly a steady flow of income. That just leaves Blizzard's mystery project Titan, which has just been massively delayed.

So it could actually make a lot of sense to sell up now while Blizzard is actually worth something, rather than hang on for too long and face the possibility that it will become much less profitable.

Talk about a douche bag move.

Couldn't A-B BUY themselves out from under Vivendi?

viggih7:

Doom972:

Aeshi:
Why the heck would you want to sell something that makes you so much money? Like you said, they make what may very well be the 2 most profitable game franchises there are out there.

Probably to make up for massive losses in other fields. I guess that the regular funds coming from Activision-Blizzard aren't enough to cover their losses.

But wouldn't it make more sense to cut the losses in those other fields? why would they hurt their money printer?

Maybe if they do that they have no chance of fixing those losing them money whereas something making a profit can take the hit and earn it back without additional support. Or maybe it doesn't make them that much money considering they want to sell them.

WoW is hemorrhaging customers over time, and COD despite being a huge seller, does not produce a large profit margin (they spend as much marketing the game as making it). The prospects for profit growth are slim for the company.

Activision-Blizzard's profit margins aside, welcome to the world of finance: the company has basically hit its height. It has nowhere to go but down. That means it's share value is only going to drop over time, so Vivendi wants to unload it now.

In the world of modern capitalism, it doesn't matter if you can make a profit, it only matters if you can make MORE profit than you did last quarter.

Guess what will happen then? Vivendi will walk away with the cash, declare bankruptcy on Activision-Blizzard and get off with screwing other people out of money without a hitch.

Unchecked Capitalism, the ability to screw other people out of money and leave them with debts without so much as a single punishment ever. It's what got us into this recession people, it's what will keep us in it for a good long while.

The only way this would be better was if they were taking the money from EA instead.

Tanis:
Talk about a douche bag move.

Couldn't A-B BUY themselves out from under Vivendi?

I imagine the only way for A-B to buy themselves would be if Vivendi became super desperate to sell them and just massively cut the asking price to a fraction of what it is now. There are very few companies in the world who would be able to put the billions of pounds necessary together in order to buy A-B, which is probably why Vivendi are having trouble selling. Microsoft, Apple and Google are the only ones who I can think of and possibly some kind of banking/financial giants who would have the necessary funds and/or interest in buying them and of those it seems to me only Microsoft would gain anything from buying them.

In any case neither the Blizzard part or the Activision part of the company makes any products that I enjoy, so I don't particularly care what Vivendi do with them (unless they cause a lot of people to lose their jobs).

Well that's just shitty of them, plain and simple.

Well, I hope they do manage to "be rid" of them then, if they are treating ActiBlizz like this (it seems extremely odd to talk about AB like that, I must admit)

Well it seems to me the mountains of money WoW has made over the years isn't really being put back in to the game, so I guess it has to go somewhere.

On the other hand however, why sign a deal that makes it so they can just take your money if they can't sell you? Why? It doesn't seem like they ever needed financial support. Why put yourself in such a position where you don't even have full control over your own company?

Tanis:
Talk about a douche bag move.

Couldn't A-B BUY themselves out from under Vivendi?

Well, apparently not if Vivendi can just take all their money anyway.

BoogieManFL:
Well it seems to me the mountains of money WoW has made over the years isn't really being put back in to the game, so I guess it has to go somewhere.

Content for WoW is being made faster and bigger and more ridiculous than ever, hell the patches these days are practically mini expansions, I think maybe the problem is it IS being put back in the game but because the amount of subscribers isn't going UP. Vivendi are stamping their feet waiting for Blizzard to produce another miracle egg or gtfo. Pretty much the same for Activision but they have bigger problems like being overly hyped marketing whores and need a new big seller IP and soon.

These companies like Vivendi don't look for sustainability they look for growth and if they cannot show their stockholders growth then the company in question is a liability.

That's what this is all about. Nothing more fancy.

Personally I'm on Acti-Blizz's side on this one. Vivendi are a money grubbing monster of the highest degree, going to youtube and media sites and banning anything they think they own, throwing C&D's out like free candy to anyone they THINK is using their intellectual property on ANY company they own, and worse of all, meddling in companies telling them how to go about marketing and handling their property and then acting like they're the injured party when this kind of shit backfires. And don't tell me it doesn't happen. It does. Whether the 'top dogs' know about it or not, there will always be some snot faced top-middle management dick bag who will 'suggest' things to their subsidiaries or they'll face difficulties internally.

My view on the matter? I wish Blizzard could take their toys and go home '-'... they can drag their ugly friend Activision along too I suppose...

This is sad. And for those wondering why. It's simple. It's company value. See I think vivendi always had the idea that they'd let AB grow in value then sell it off for a profit. The issue is however that there's no one with that kinda a cash to spend in the current global economy sooooo...they're stuck holding the goods which they weren't planning on, they were planning on selling the goods for a cool couple billion! They were expecting super crit one-shot income , rather than the respectable income over time.

As for WoW sinking... the game can still be saved assuming the devs wise up and the directors allow some common sense. Wise up in that they stop focusing on end game raid grinding, seriously, that's what they're problem boils down to. It'd be like mcdonalds focusing on their fries as the main course and while that would make the 30% of their customer base that love fries happy, it more or less means that's 60% that will eventually go elsewhere.

We're not seeing all/any of the real numbers here so to be honoest this is mega corp stuff. Dark deals in dark rooms. Lets just hope it doesn't hinder blizzard/activision too much or even damage them. People may moan about the Activision side mostly but I do fear for its safety when it's owners are borking up this badly.

Wow the biggest videogame publisher/developer might be caused to go bankrupt because their parent company is gonna steal (I know its legal, but it feels like they are stealing since bliz/act did all the work developing and publishing those games) all their money. If that happened, it would be like the corporate gutting of Pandemic and Westwood all over again except on the biggest scale ever seen.

Kahani:

viggih7:
But wouldn't it make more sense to cut the losses in those other fields? why would they hurt their money printer?

Maybe they suspect it won't continue printing them money for much longer? WoW gets a shot in the arm with each new expansion, but there can be no doubt that it's in decline and won't be around forever. Diablo and Starcraft are successful enough, but one game every 12 years in a franchise isn't exactly a steady flow of income. That just leaves Blizzard's mystery project Titan, which has just been massively delayed.

So it could actually make a lot of sense to sell up now while Blizzard is actually worth something, rather than hang on for too long and face the possibility that it will become much less profitable.

I think it's the fact that they're only getting millions of dollars out of Activision-Blizzard instead of billions. They were hoping to sell them off for a neat billion or two profit, which doesn't work if nobody's buying. So they drain all the cash that they can from it, and nobody wins.

Wow, what a phenomenally ****ty move.

and here, boys and girls, is a great example of how well "capitalizm works".
to be honest, i wish Blizzard woudl be able to split as it went downhill once it merged with activision anyway, and activision, you can burn for all i care.

Vivendi should change their name to St John.

They're never going to sell their entire stake to a single company, so they're gunna have to split it up. I hear Disney is up for throwing billions of dollars around.

So, Activision and Blizzard are gonna get the Mitt Romney, vulture capitalist special huh? Interesting. I didn't ever imagine the biggest threat to the Axis of Evil would be a more evil company outside the gaming industry.

Kahani:

viggih7:
But wouldn't it make more sense to cut the losses in those other fields? why would they hurt their money printer?

Maybe they suspect it won't continue printing them money for much longer? WoW gets a shot in the arm with each new expansion, but there can be no doubt that it's in decline and won't be around forever. Diablo and Starcraft are successful enough, but one game every 12 years in a franchise isn't exactly a steady flow of income. That just leaves Blizzard's mystery project Titan, which has just been massively delayed.

So it could actually make a lot of sense to sell up now while Blizzard is actually worth something, rather than hang on for too long and face the possibility that it will become much less profitable.

You are completely forgetting Activision in that. It's even in the name, Activision-Blizzard. One group, no distinction. As in, one of the largest publishers (and thus widest range of source for money), on top of one of the most successful MMO out there.

The lowest WoW has gone is 8-9 million. While investors hate seeing that, the simple fact of the matter is that is still easily 4 times the numbers that other MMOs have managed to hit with any luck. :ineage, though I can't remember which one at the moment, had reached up to 2 million subs before Vanilla WoW came out.
That is on top of the horrendously overpriced "Blizzard" store full of mounts and pets, as well as the microtransaction store that is more than likely to be inbound (the first item data-mined for it is an elixir with a 100% increase in XP for quests and monsters).

Steven Bogos:
Vivendi May Siphon Funds From Activision Blizzard

France-based multinational corporation Vivendi is the majority shareholder in prominent videogame publisher Activision Blizzard, with a 61% stake in the company. Vivendi will gain the power to forcibly extract cash dividends from Acitivsion Blizzard as of Tuesday, and may issue a "cash grab" which could bring the publisher to a net debt of over $400 million.

Source: Reuters via VG24/7

Permalink

So if they only own 61% of the stock various other people around the world own the other 39%. Isn't this effectively stealing money from those people?

viggih7:

Doom972:

Aeshi:
Why the heck would you want to sell something that makes you so much money? Like you said, they make what may very well be the 2 most profitable game franchises there are out there.

Probably to make up for massive losses in other fields. I guess that the regular funds coming from Activision-Blizzard aren't enough to cover their losses.

But wouldn't it make more sense to cut the losses in those other fields? why would they hurt their money printer?

That's what makes the most sense, but I've never seen it happen. Executives always keep their friends on board till the end, even if it kills them. My dad controlled 1 out of 15 offices of a particular construction company before the recession, of which his office was THE ONLY ONE that was making a profit for the company. So logically the CEO fires him (the guy he doesn't 'personally know'), and a month later the entire company goes under and the CEO personally files for bankruptcy, as he had to personally fund the hole my dad left. As a middle finger, my dad decided he didn't want to work for others anymore and immediately made his own business, and it's still going strong 7 years later :P

Activision-Blizzard is just as faceless as every other asset Vivendi owns. Keep in mind that as OP points out these guys have their fingers in the pockets of Big Oil, so on a good day Act-Bliz makes pennies in comparison to the international economy fueling assets. The investment might be seeing a return 3x greater but that isn't cutting it as other assets see returns to the factor of 100x. It's not worth it, and as others have pointed out the WoW/CoD bubbles are expected to pop soon. To them Activision-Blizzard is Old Yeller. They are grabbing a keepsake, then they are going to bring it out back and put a cap in it.

Charli:

BoogieManFL:
Well it seems to me the mountains of money WoW has made over the years isn't really being put back in to the game, so I guess it has to go somewhere.

Content for WoW is being made faster and bigger and more ridiculous than ever, hell the patches these days are practically mini expansions, I think maybe the problem is it IS being put back in the game but because the amount of subscribers isn't going UP. Vivendi are stamping their feet waiting for Blizzard to produce another miracle egg or gtfo. Pretty much the same for Activision but they have bigger problems like being overly hyped marketing whores and need a new big seller IP and soon.

These companies like Vivendi don't look for sustainability they look for growth and if they cannot show their stockholders growth then the company in question is a liability.

That's what this is all about. Nothing more fancy.

Personally I'm on Acti-Blizz's side on this one. Vivendi are a money grubbing monster of the highest degree, going to youtube and media sites and banning anything they think they own, throwing C&D's out like free candy to anyone they THINK is using their intellectual property on ANY company they own, and worse of all, meddling in companies telling them how to go about marketing and handling their property and then acting like they're the injured party when this kind of shit backfires. And don't tell me it doesn't happen. It does. Whether the 'top dogs' know about it or not, there will always be some snot faced top-middle management dick bag who will 'suggest' things to their subsidiaries or they'll face difficulties internally.

My view on the matter? I wish Blizzard could take their toys and go home '-'... they can drag their ugly friend Activision along too I suppose...

Meh, that's what happens when you sell your soul to the devil. Blizzard will suffer for it's past mistakes as it should.

Aeshi:
Why the heck would you want to sell something that makes you so much money? Like you said, they make what may very well be the 2 most profitable game franchises there are out there.

Because they, and a lot of other crazy market gamblers, believe Activision/Blizzard is a walking corpse. The moment CoD and/or WoW fail the revenue stream on the company will tighten and effectively kill the company. Too much revenue from too few games no matter how good it look on paper will end badly when the gravy train stops.

Vivendi wants to get ride of it while it still looked profitable. If they can't sell it they'll just raid it for all it's worth and leave it to die on the side of the road. It's how corporate raiders work and make their money.

A lot of businesses have died this way, and if Vivendi is successful Blizzard will be effectively dead. The only way they have to survive is to create an IP that is as profitable as CoD and WoW. Without the money Vivendi is going to take they won't be able too.

For some reason I'm not sad about this. The DRM in SC2 and D3 burned me pretty badly. And not to meantion that they stated that D3 supported a card for my Wifes Mac so she bought the game for her, but it certainly didn't work with that particular card ever even though they stated it would, and had tested that card on a mac. No reasonable return policy, no way to resell the game due to DRM, and a waist of my time and effort moving heaven and earth to get it to work.

In a way, to me this is the only justice I'll ever see.

Aeshi:
Why the heck would you want to sell something that makes you so much money? Like you said, they make what may very well be the 2 most profitable game franchises there are out there.

I'm no economist, but isn't it wise to sell something at its peak? Even if WoW and CoD don't die anytime soon, I doubt they'll drastically increase in value, especially under Activision's management (which could be argued to be the reason for WoW's current decline, or else just a declining interest in MMOs in general). If they can get someone to actually pay the exorbitant fee the company is worth, it will probably make them more money than the games themselves will, and allow them to latch onto (and probably sink) the next big trend. Seems financially sound to me, albeit trademarkedly unethical.

So this is what happens when the big fish runs out of smaller fish to eat. I was starting to wonder when we'd see this happen. If Vivendi is serious about selling then they have to break their shares up or severely reduce their asking price. You don't just go to market and sell the controlling share in something that big because no one can afford to buy it. Not to mention the market is basically a self-fulfilling prophesy machine, so all the doom saying usually directly contributes to actual doom.

Doooooom!

RatherDashing89:
I'm no economist, but isn't it wise to sell something at its peak?

And this is why the market is essentially gambling: You have to figure out when the peak is and sell before everyone else figures out where the peak is, because once they do, or even if they just THINK they do, they won't buy. Fun fun for everyone, except the companies being bought and sold, since they're the ones left holding the bag.

I've hated Vivendi ever since they killed Sierra Interactive. Seeing the name Vivendi pop in anything is baaaaaaad news, and this is jsut confirmed now. Act-Blizz is not of my liking either, but the move that Vivendi has planned is just waaaaaaay to sleazy. So, we were down to 25 studios in AAA gaming, right? When Act-Blizz dies, how many more will be gone?

Oh dear lord, Vivendi is cannibalizing itself. This is pretty much the textbook case of how the legal obligation towards shareholders hurts business as a whole. Shareholder demands maximum profit RIGHT FREAKING NOW. Company is legally obligated to burn bridges, sell off assets, and 'cash in' goodwill and ongoing development.

The result is a dead golden goose, employees without jobs, and a company with a tarnished reputation unable to make the next insane mandate.

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