Disney Could Benefit With Purchase Of Activision According To Investor
Disney has been the focus of recent rumors suggesting that a possible purchase of Activision-Blizzard could play to the multimedia giant's core strengths.
Stories have been surfacing from multiple outlets detailing a major investor who goes by the name of Nick Licouris. Licouris's firm owns a few million dollars worth of shares of Disney (NYSE:DIS) and has studied the company's portfolio extensively. The idea is that Disney already has some key ties to Activision (NASDAQ:ATVI) and that a potential acquisition would unlock low-handing synergies that play to each company's product offerings.
Does a Disney and Activision merger make sense?
Licouris works for the investment firm Gerber Kawasaki (unrelated to the motorcycle brand) and according to him, Disney would benefit from the ability to develop games with its well-established IP and slate of well-known characters. And Licouris would be a good source to listen to as his firm helped handle the Disney - Fox merger which was a massive shakeup of the multimedia landscape, at least here in the U.S. The creators of Mickey Mouse have also proved that they have an eye towards the future as evidenced by Disney wrangling control of Hulu from Comcast, even at the high-cost Comcast demanded.
Further, Disney already works with Activision as it streams the competitive Overwatch League on its ABC, ESPN, and Disney XD channels so its no stranger to the company. Disney has shown a penchant for pushing its brand into video games and sometimes this licensing approach has paid off massively - Kingdom Hearts would be a great example. Disney merely streaming Overwatch doesn't mean it has a very deep relationship with Activision, but it could have its eye on growing streaming viewers. Remember, Disney is now in the streaming game with both its majority stake in Hulu and its own in-house platform Disney+. Owning some globally popular video game franchises could afford it some unique opportunities to offer engaging streams to gaming fans around the world.
However, that brings us to where this rumor ends as just that - a rumor. Disney has stated before that they view licensing as their preferred way to monetize their intellectual property via video games.
Activision is probably safe - for now
Disney CEO Bob Iger said exactly that just earlier this year, that Disney wouldn’t be looking to get back into publishing games. Back in February, Mr. Iger told Variety magazine that while Disney was “good at making movies, and television shows, and theme parks, and cruise ships, and the like, we’ve just never managed to demonstrate much skill on the publishing side of games.”
Surely Licouris knew of the CEO's thoughts before making his proclamation that Disney should plunk down more than $37 billion for Activision. The key thing here might be valuation. In less than a year Activision-Blizzard has lost around half of its value. In September Activision was worth about $70 billion, and as of today its down to the aforementioned $37 billion. Investors began to sell-off in droves as profitability dipped and a perceived lack of a solid pipeline of future games began to permeate Wall Street. Licouris made note of this and believes that if this merger were to happen it "needs to happen soon".
There is one curious happening, though. One of the original founders of Blizzard just announced today that he was leaving the company. Frank Pearce was a founder of Blizzard over 28 years ago, and he is stepping down from his role of Chief Development Officer. Pearce still had a very involved hand in the creation of new games at Blizzard, and one has to wonder if his departure is purely that of coincidence or if something else is brewing behind the scenes. Creative types rarely enjoy additional corporate oversight and it's not that hard to imagine that after suffering through Activision's takeover of the company, a potential changeover to the hand's of Disney was too much for Pearce.