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Why Disney Should Buy EA

| 14 Dec 2008 19:00
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One popular investing site supports the Electronic Arts/Disney merger concept, adding to the ongoing analyst debate on the deal.

In response to a questions about whether Disney would continue to partner with game developers or increase its own in-house development by purchasing the downtrodden Electronic Arts, Chief Financial Officer Tom Staggs responded, "I don't want you to conclude that those are in the long term mutually exclusive," adding that "strategic and attractive" gaming acquisitions, like last year's Club Penguin purchase, aren't out of the question.

The Motley Fool reported its own reasons why a Disney/EA team would be a great business move.

Being no stranger to large acquisitions, writer Rick Aristotle Munarriz noted, "Disney has aimed even higher in the past in its Pixar and Capital Cities/ABC deals."

Disney, which owns the TV channel and sports brand ESPN, could use this monopoly in sports to easily pair with the dominant EA Sports products. "It's only fitting that EA's legendary line of sporting titles -- like Madden, Tiger Woods Golf, and FIFA -- huddle up with the parent company of ESPN. In fact, it would be branding magic to have all of the games marketed as ESPN sports," continued Munarriz.

Adding EA's developers with Disney's Imagineering department would increase product synergy and improve rides at theme parks. "Disney is incorporating gaming elements into its latest theme park attractions like Toy Story Mania," explained Munarriz. "The key is to give its rides a little more repeatability with jaded audiences. Disney also realizes that it can't carve out large tracts of land to build mammoth destinations that attract tens of millions of guests."

A merger deal has its doubters; competing stock blog BloggingStocks reported a few weeks back its belief that this combining companies "would be one of the worst things that [Disney] CEO Bob Iger could do."

The Fool's hoped "convergence" might not be possible if BloggingStocks is to be believed. The site added, "Imagine if Disney had to deal with a larger, more complex pipeline, one that would obviously contain a lot of properties that could not be used in, say, the theme parks or by the movie studio. Personally, I think it would be a distraction to Disney."

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