Vivendi May Be About To Squeeze Activision Blizzard For Billions

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Vivendi May Be About To Squeeze Activision Blizzard For Billions

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The rule that previously constrained Vivendi's borrowing efforts has expired.

How much does Vivendi want to force Activision Blizzard to borrow, in order to shore up its own struggling telecom subsidiaries? Somewhere around the $5 billion mark seems a likely scenario, but that has yet to be decided; the 22nd July Vivendi board meeting will thrash out the finer details, assuming that there will be finer details to thrash. In the ideal, Vivendi would like Activision to pay out a massive cash dividend to shareholders which, since Vivendi holds 61% of Activision's stock, will effectively be a straight cash injection into Vivendi's anemic bottom line. Until fairly recently Vivendi couldn't force Activision to do anything without the approval of three out of five independent Activision shareholders, but that deal, signed when Vivendi bought Activision out, expired earlier this month. Now Activision is at Vivendi's mercy, and while there have been indications that Activision's Bobby Kotick would like very much to buy his way out of this position, there's been no welcome on Vivendi's part for that move.

Vivendi's desire for cash has a lot to do with its reliance on telecoms units as assets, many of which are suffering from increased competition and loss of profit. It has been trying to sell off its telecom businesses, with some success, but those deals are still in negotiation. If the Vivendi motion - the details of which have yet to be made public - passes, then a second, Activision meeting later this week will be pushed to confirm the deal.

It's unlikely that Kotick and Activision will go quietly into that good debt, though it may be unavoidable. Talks of an Activision buyback have gone nowhere, at least for the moment. "We think that reports of the two sides failing to reach agreement on price are close to the mark," analyst Michael Pachter has said in the past, but the question remains: would Vivendi accept any offer Kotick might make, or would it rather keep a stranglehold on its golden goose?

Source: Reuters

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Well Kotick seems to be the only one willing to make an offer, but selling off subsidiaries has been the Vivendi business model for the past decade.

So, money grubbing prick is being strongarmed by his superiors into taking on debt?

I can see this working out real well for everyone.
/sarcasm

hmmm... I'm wondering if Vivendi's goal is to get all this cash, buy themselves off of Activision Blizzard, and strike out on their own? It might explain Vivendi's lack of games or announcements for the last few months...

While I dislike ActiBlizz as much as the next guy, this just makes me horribly sad and fucking mad as hell at the same time. From my point of view, Vivendi is just doing the equivalent of a Yoshi double-jump, using one company's momentum to keep itself afloat a few precious seconds longer, while the other is sent to a fiery doom. Say what you will about Activision, at least they make goddamn video games.

This entire situation is just sour. I understand Vivendi is in dire straits with their telecom situation, but their current plan would also heavily cripple a perfectly healthy game publisher.

Viva la Activision Blizzard.

Seriously, if the giant falls, it should be because they finally do something so stupid the customers stop supporting them, not because of corporate politics.

I think if Kotick is evil, he'd be Darth Vader and Vivendi be the Emperor. Who would you root for?

"The Lannisters send their regards", Bobby... :P

There's always a bigger fish. Even the bullies have to answer to someone tougher and meaner eventually. Kind of shitty, but that's the way of it. Hopefully they can pull through without laying off too many people.

I'd like to know who buys stocks without having them pay a dividend. If you're investing for the long term, thats what you want. But I don't know when this deal was made, nor how long the terms were on no dividends without independents approval.

Dr.Awkward:
hmmm... I'm wondering if Vivendi's goal is to get all this cash, buy themselves off of Activision Blizzard, and strike out on their own? It might explain Vivendi's lack of games or announcements for the last few months...

Vivendi own Activision, its Activision whom seemingly want to get away from Vivendi.

i hope nothing bad happens since i still like blizzard

Dr.Awkward:
hmmm... I'm wondering if Vivendi's goal is to get all this cash, buy themselves off of Activision Blizzard, and strike out on their own?

No, they're trying to load up Actiblizz with their other companies' debts, because nobody will lend those other failing companies capital to invest.

They're hoping that Activision Blizzard will continue the upward trend the two companies have had in the last decade, they are literally betting the company on it. Despite evidence the last couple of years that both Activision and Blizzard are plateauing out and may start going back down soon, they're still the best Vivendi has got and thanks to the previous contract they have little in the way of existing debt. If Actiblizz goes south Vivendi can declare it bankrupt, effectively wiping the debt and giving them some hugely profitable IPs/studios to sell at gigantic prices.

The very last thing Vivendi wants is to lose control of Actiblizz, even in exchange for $5billion as Vivendi will burn through that in no time at all with the way it's other companies are bleeding money. Actiblizz makes profit, Vivendi need that no matter how much the other shareholders offer for a buyout.

It's a weird situation where Kotick is the 'good' guy, then again Actiblizz getting saddled with an impossible situation then taken apart would be delicious irony given the way Activision have behaved with their studios under Kotick's rule.

Pandaman1911:
While I dislike ActiBlizz as much as the next guy, this just makes me horribly sad and fucking mad as hell at the same time. From my point of view, Vivendi is just doing the equivalent of a Yoshi double-jump, using one company's momentum to keep itself afloat a few precious seconds longer, while the other is sent to a fiery doom. Say what you will about Activision, at least they make goddamn video games.

Pretty much states my feelings about it. I'm really curious to see what the trickle down effect will be on the individual groups. Blizzard has already been speeding up production on its franchises and their individual content patches/expansions and it's had some serious effects. Too soon means quicker burnout (because eventually you get to the point where there's an overwhelming and off-putting amount of content) and down the road less players because they're bored. Definitely a double-edged sword.

Yar! This be great for the corporate raiders! These scurvy dogs been getting away with running a healthy profitable company! Now it be time to legally take ALL THEIR BOOTY! Logic be damned, short term profit be thars!

and suddenly all that optimism about the next generation of gaming is depleting. Furthermore, it's kind of fitting how a company like Activision, who has ruthlessly cast aside tons of developers, is now being used as little more than a tool for another, bigger entity. We'll see how this goes.

Wow. I never thought I'd feel sympathy for Activision, but no otherwise healthy company deserves to see its financial fate decided by a bunch of a$$#@%@$' desires for an utterly undeserved and unwarranted pay-out.

Pandaman1911:
While I dislike ActiBlizz as much as the next guy, this just makes me horribly sad and fucking mad as hell at the same time. From my point of view, Vivendi is just doing the equivalent of a Yoshi double-jump, using one company's momentum to keep itself afloat a few precious seconds longer, while the other is sent to a fiery doom. Say what you will about Activision, at least they make goddamn video games.

Pretty much. And while they are the majority shareholder, it bothers me immensely that they could be allowed to do something which could very well harm ActiBlizz's business at the expense of every other shareholder of that company.

Pretty much the only good thing I can say about Acti-Blizz is they can make some damn fine cutscene cinematics (Blizzard in particular), and while part of me is happy to see them get kicked right in the balls for once, the other part just sighs and facepalms at this blatant act of corporate politics and greed. Seriously, I don't know much about this deal that expired, but apparently Vivendi was chomping at the bit, just counting the days until it expires. I imagine some guy sitting there with a watch in one hand and a phone in the other so literally the moment that old deal was done he could call up Acti-Blizz and be like "GIMME DA MONIES!!!!"

Jack_in_the_green:
"The Lannisters send their regards", Bobby... :P

Laughed my ass off, then cried at the memory.

Blizzard won't hand over a chunk of their Golden Mountain of Diamonds without a fight!!

being publicly traded is a harsh mistress.

While the news is disturbing, I think it might be a bit premature to declare it the death of Activision without seeing what the effects of paying out a dividend will be. Oh, I'm sure it'll cause some problems, but we don't know exactly how much of a problem it will be.

gigastar:

Dr.Awkward:
hmmm... I'm wondering if Vivendi's goal is to get all this cash, buy themselves off of Activision Blizzard, and strike out on their own? It might explain Vivendi's lack of games or announcements for the last few months...

Vivendi own Activision, its Activision whom seemingly want to get away from Vivendi.

If I remember correctly, Vivendi has actually been trying to sell off Activision for years now. The problem is that no one who could actually afford to buy it is interested.

MCerberus:
Yar! This be great for the corporate raiders! These scurvy dogs been getting away with running a healthy profitable company! Now it be time to legally take ALL THEIR BOOTY! Logic be damned, short term profit be thars!

Sailing across the wide acountant-sea...

Sorry man, you just brought up some monty python for me!

I love the meaning of life.

Honestly though, this is just a bigger company shifting money on a balance sheet, the only reason we care is because it is a games company.

Pandaman1911:
While I dislike ActiBlizz as much as the next guy, this just makes me horribly sad and fucking mad as hell at the same time. From my point of view, Vivendi is just doing the equivalent of a Yoshi double-jump, using one company's momentum to keep itself afloat a few precious seconds longer, while the other is sent to a fiery doom. Say what you will about Activision, at least they make goddamn video games.

This once happened to an organization I was once employed under (nothing to do with games, but very much similar). Despite happening often enough, I can tell you now, that this is assuredly a huge mistake and will almost certainly end in tears for Act-Bliz. Vivendi will stand on Act-Bliz to keep its head above the water which threatens the job-security of everyone employed there and of course will affect the consumers. Focus on product/service-for-profit will shift to a panicky squealing to get clear of debt and product/service will suffer as a result. The better quality that consumers tend to enjoy is borne primarily from a process of risk and experimentation. Risk and experimentation die out fast in a high-stress and large debt environment. If the debt strangles out Act-Bliz, it will go down in flames while Vivendi draws a few more labored breaths. Even if Act-Bliz sinks, Vivendi will probably continue to plow blindly-forward with poor business models and practice. It's purely conjecture ... but I rode this god-awful train once before.

carpathic:

Honestly though, this is just a bigger company shifting money on a balance sheet, the only reason we care is because it is a games company.

YARR! From a project management standpoint this move be a sign of a failing company. Taking long-term booty from the coffers to pay for yer wenches fills your boat with bilge. Fact is, take from the fixing budget and ye be askin for your boats to sink. Activision needs to be fighting these scalawags using minority stakeholder protections say I!

MCerberus:

carpathic:

Honestly though, this is just a bigger company shifting money on a balance sheet, the only reason we care is because it is a games company.

YARR! From a project management standpoint this move be a sign of a failing company. Taking long-term booty from the coffers to pay for yer wenches fills your boat with bilge. Fact is, take from the fixing budget and ye be askin for your boats to sink. Activision needs to be fighting these scalawags using minority stakeholder protections say I!

Ye be havin' no arrrrgument from mee on yer point thar.

It is a curious turn around - not sure why Vivendi sold off all the old Bronfman booze assets to become a media company. A curious choice to make. Move from high margin stuff that people ALWAYS buy into high risk, low margine products that people may or may not buy regardless of quality of product.

Guess the internet was mighty sexy earlier on in time :)

I love capitalism. I love that we pushed the logic to such an extend that we can now legally kill companies that we own. We should push the logic even more, there's so much money to be made. I'm glad we live in that system. And don't dare say the opposite, you communists!

No matter who ends up in control Activision or Vivendi, I can't say either outcome will cause me to look at buying games from them. The last Vivendi game I got, came in a cereal box.

MCerberus:
Yar! This be great for the corporate raiders! These scurvy dogs been getting away with running a healthy profitable company! Now it be time to legally take ALL THEIR BOOTY! Logic be damned, short term profit be thars!

To be fair to Vivendi, unless something changes drastically in the near future, they don't have a long-term to think about.

you know, I kinda hope ActiBlizz does manage to break away from Vivendi, not cause I like them or anything, just cause I'm against one company crippling another like this.

but then, Blizzard has yet to make a game I can say I like so I couldn't care less if they go under, and Activision? out side Prototype 1, be hard pressed to point at any games of there's I own.

so, an irate 'meh' from me on this I guess

With how Activision have acted the last few years, I couldn't care less for their welfare. Karma's a bitch.

I hope Acti-Blizz doesn't go under... Or if the Activision ship sinks along with Vivendi, Blizzard can sail the storm. I have a great deal of respect for Blizzard, and Chris Metzen seems like a pretty cool guy, I don't want to see such a great company go under.

Well, let's set fire to the acti-bliz ship now. They destroyed two great franchises (WoW and Spyro), time for them to go down with the franchises.

Good riddance to them.

Unless they can actually pull their collective head out of their ass, shoot the guy who made Skylanders, and get back to making WoW playable.

Hey, what's with all the sqwaking and flapping? Where'd all these feathers come from?

Ohhh, I see, it's the chickens coming home to roost. You knew Vivendi would pull something like this, didn't you, Activision? I mean, all those high-priced lawyers of yours went over that contract, right?

Witty Name Here:
I hope Acti-Blizz doesn't go under... Or if the Activision ship sinks along with Vivendi, Blizzard can sail the storm. I have a great deal of respect for Blizzard, and Chris Metzen seems like a pretty cool guy, I don't want to see such a great company go under.

They wont die, at worst they get sold off and someone else picks up the wowfair checks.

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