MediaFile

Soccer clubs and mortgages: How a media mogul spends $10 million

Unlike many of us, media executives know what it’s like to play around with large wads of cash. So it seemed natural to ask them about what kind of investment opportunities they’re seeing when they gathered in New York this week for the Reuters Global Media Summit.

We gave each media honcho $10 million in hypothetical cash and told them to put the money to work without buying stock in their own companies.

Diller11Some executives plowed the money into broad sectors and regions, like emerging markets, while others zeroed in on specific stocks, like Electronic Arts’ CEO John Riccitiello’s penchant for software maker Adobe.

Zynga CEO Mark Pincus said he already owns shares of privately-held Facebook, the Internet social network on which many of Zynga’s video games are designed to be played on, and that he’d buy more on the secondary markets (OK, so he creatively sidestepped the rule against investing in his own company).

And some media moguls seemed to have investment strategies driven by goals other than maximizing returns:

from Summit Notebook:

Electronic Arts CEO straightens mom out at Thanksgiving

Restructuring: You shouldn't be afraid to do it, even more than once if you have to, and even if your own family doesn't understand it. Just ask John Riccitiello, chief executive of videogame publisher Electronic Arts. Here's what he said at the Reuters Global Media Summit on Tuesday:

A company that doesn't restructure in the face of that dramatic transformation, I don't know what they're doing. GM had a great decade in the '70s building large cars... They didn't restructure in the face of what was obvious. The music industry kept telling us they wanted to buy albums, and then they tried to sue us. It didn't serve them well. ... We look at the future and we are aggressively embracing it... .

That means taking the big net loss at times, even though as Riccitiello stressed, that was on a "GAAP" basis. That means the bottom line. Still, media businesses tend to look at profit before various charges (often expressed as operating profit or other terms that are comparable to Wall Street analysts' expectations and are said to offer a true picture of a media business's health), and executives sometimes get irritated when you insist on reporting their bottom line performance. Why? Because a massive loss from a writedown or a restructuring shows up in the bottom line, but it is not always a sign of the business's fundamental health.

from Shop Talk:

EA Sports looking to score with new toy lines

easports12If you want your football or baseball to cheer for you after a great play, EA Sports has just the toys for you.

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EA Sports, a unit of Electronic Arts, is introducing its first line of products beyond the company's popular video games, offering sports toys and equipment to appeal to the young sports lovers in the house. 

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The EA Sports-branded equipment, made by Toy Island, is rolling out now in Target and Toys "R" Us stores. Terms of the licensing deal were not disclosed.    

EA brings “Madden” to iPhone

Electronic Arts is launching its most venerable video game franchise, “Madden Football,” onto the hottest new gaming platform going, Apple’s iPhone and iPod touch.

The game, whose origins date back 20 years, has been a cash cow for EA over the years, and the company is now seeking to extend that popularity into the fast-growing smartphone market. EA showed a demo of the game at Apple’s media event on Wednesday.

“We’re really happy with the quality of the game, making it fun and easy to pick up and play and we think we’ve created the most authentic and realistic football experience in the market today,” said Adam Sussman, vice president of worldwide publishing for EA Mobile.

Game on: its earnings time for EA, Activision

Video game publisher Electronic Arts will report first-quarter earnings after the bell today, amid Wall Street’s hopes of an industry comeback in the second half of the year. June video game sales in the U.S. were pretty dismal, but investors are probably betting on big-name game titles and possible game console price cuts to pump some life back into the slump in the second half of 2009.

Analysts say EA, the publisher of hit football game Madden NFL, likely had a strong June quarter, even though they are predicting a loss per share of 13 cents. Last week, UBS initiated coverage of EA and Activision with “buy” ratings. The firm expects the $39 billion industry to grow to $55 billion in 2012, and believes EA is a compelling turnaround story because of its re-energized game strategy.

Activision, which reports Wednesday, of course remains the industry darling, with an enviable stable of franchises, including Guitar Hero and Call of Duty, new installments of which will be released later in the year.

AMD’s ATI breaks 1Ghz barrier — for real?

In the highly demanding (and some say shrinking) world of PC gaming, only two graphics powers really count: reigning popular champ Nvidia and AMD’s ATI division. Now it looks like ATI’s Radeon may have got a bit of a lead on its arch-foe.

ATI, once considered a perennial also-ran to Nvidia’s cutting-edge graphics chips, has become the first to crack what it called the 1 Gigahertz barrier on standard air-cooling. Pounding its chest, the company trumpeted on Wednesday the milestone and talked about “amazing gaming experiences” for the likes of Ubisoft’s Tom Clancy’s H.A.W.X. and Electronic Arts’ Battleforge.

It would be interesting to see how Nvidia — whose logo still appears more often alongside cutting-edge games such as medieval third-person actioner Assassin’s Creed to blockbuster first-person shooter Crysis — will respond in their never-ending arms race.

Game guru Wright quits EA

Wednesday’s announcement that celebrated game designer Will Wright is parting company with Electronic Arts is the latest piece of tough news in what has been a difficult year for EA. Wright, who masterminded the “Sims” franchise along with the newer  “Spore”, is a certifiable legend who has been called the the “Albert Einstein of the gaming business.”

“Sims” and its related spinoffs have sold more than 100 million units over the years.

In February, EA posted weaker-than-expected results, and delayed the release of several games — including “Sims 3″ — causing it to forecast a loss for the fiscal year. The company is cutting 1,100 jobs even as it goes mano-a-mano with larger rival Activision Blizzard.

$60 video games? Do the math, says Zelnick

How do entertainment retailers come up with the prices they charge? Why is a movie theater ticket $10, a music CD $15, a rental DVD $3-$5 and a top video game $60?

We asked Strauss Zelnick, executive chairman of game publisher Take-Two. He says it’s simple math, based upon the value of that experience.

Prices are determined by the marketplace — if folks stopped buying stuff, prices would fall, etc. (Think gasoline). Balance that with cost. A game like Halo or Grand Theft Auto takes years to develop and costs as much to make as a Hollywood film.

from DealZone:

Shane Kim’s crystal ball: videogame deals, new content

Microsoft's videogame chief Shane Kim came by our New York office this morning for the Reuters Media Summit and shared his thoughts on XBox 360 sales ("cautiously optimistic") and the outlook for the gaming industry amid the economic doom-and-gloom ("Who knows, maybe flat performance will be considered a remarkable achievement").

He also gazed into his crystal ball and served up some insights on the trends shaping the gaming business.

Consolidation is going to continue, he thinks, especially among the smaller videogame publishers as they search for hit games while keeping costs in check.

Move over Mom, Lifetime’s got game

When the going gets tough, the tough play dress up.

Women-focused cable channel Lifetime Network on Monday expanded its push into gaming by buying Korean casual gaming site, Roiworld.com, the No. 1 teen dress up site in Korea.

Terms were undisclosed, but the company says its move to tap into the female gaming audience, particularly where they use avatars to dress up,  is paying big and younger dividends.

While Lifetime’s traditional TV audience has tended  to skew to more mature women,  the network is trying to broaden its audience to include more younger viewers and its Web dress-up properties are drawing women, largely aged 30 and below. Roiworld.com will bring more than 1,000 additional fashion and style games to the Lifetime Games portfolio, which it claims is a  top 25 online destination among casual gaming sites.