Vivendi Considers Selling Profitable Video-Game Unit
Media giant Vivendi Universal is pondering a sale of its profitable video-games business.
Strapped for cash and burdened with $19 billion in debt, Vivendi Universal has been hashing out various scenarios for raising funds in recent weeks, including the sale of the games business, according to sources familiar with the discussions.
The French company’s new chairman, Jean-Rene Fourtou, also is weighing the sale of its Houghton Mifflin book publishing unit, which it purchased last year for $2.2 billion.
A spokeswoman for the games unit declined to comment.
Analysts say the business, which has about $600 million in annual revenue, could fetch more than $1 billion given the current strength of the video-game market, which is expected to grow by more than 20% worldwide this year.
Vivendi’s game unit consists of Blizzard Entertainment in Irvine; Sierra Entertainment in Bellevue, Wash.; Universal Interactive in Universal City; NDA Productions in Europe; and a publishing and distribution unit.
The unit publishes games based on its popular Warcraft, Spyro and Crash Bandicoot franchises. Its latest release of “Warcraft III†generated about $64 million in retail sales during its first seven days.
“The timing would be good for a sale, especially combined with Vivendi’s clear need for cash,†said Shawn Milne, an analyst with SoundView Technology Group in San Francisco.
The difficulty, however, is in finding a buyer. Only two independent publishers--Redwood City, Calif.-based Electronic Arts Inc. and Activision Inc. of Santa Monica--have more than $500 million in cash. But buying Vivendi’s game unit would be uncharacteristic of these companies, analysts say.
Sega Corp., which told investors in May that it was looking for acquisitions, has just $400 million in cash and $1 billion in debt.
Only Microsoft Corp., with more than $30 billion in cash, would have the funds to purchase the unit.
EA, Activision, Sega and Microsoft officials declined to comment.
Vivendi shares gained 33 cents, or 2%, to $15.15 on the New York Stock Exchange.
