Vivendi May Siphon Funds From Activision Blizzard

[Steven Bogos]

Vivendi May Siphon Funds From Activision Blizzard

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 [http://www.escapistmagazine.com/news/view/117782-Vivendi-Ponders-Activision-Sale]. 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: VG24/7 [http://www.reuters.com/article/2013/07/07/vivendi-activision-idUSL6N0FD0L020130707]

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[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.

 

[Doom972]

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.

 

[viggih7]

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?

 

[CriticalMiss]

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

 

[UnnDunn]

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.

 

[Kahani]

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.

 

[Tanis]

Talk about a douche bag move.

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

 

[Dark Knifer]

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.

 

[Jumwa]

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.

 

[1337mokro]

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.

 

[Genocidicles]

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

 

[Ironside]

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).

 

[Andy Shandy]

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)

 

[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.

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?

 

[Caiphus]

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.

 

[Charli]

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...

 

[LordMonty]

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.

 

[NvrPhazed]

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.