What is it about greedy video game publisher executives?
Just two years ago at Electronic Arts (NASDAQ:ERTS), with
only
eight months on the job as Chief Executive Officer, John
Riccitello announced a buyout of
Pandemic and Bioware studios from his former firm Elevation
Partners, of which he was one of the founders. The purchase
price looked astronomical for a developer: 840 million. To
put that in perspective, Take Two (TTWO) Interactive,
Inc. purchased Bioshock developer Irrational Games for 11 million
and Civilization publisher Firaxis for 27 million in 2006.
Today, we are learning that Pandemic Studios, one half of that
840 million dollar acquisition, is
being closed down, suggesting that the studio is worthless to
EA at this point – only two years following the deal.
According to
SEC documents, Mr. Riccitello pocketed up to 4.9 million on
that deal, and no doubt helped his fellow co-founders of Elevation
Partners walk away making a nice profit on that deal.
EA’s shareholders have been left with the bill - and a stock
that has fallen 70% since that deal was completed.
It would be a sad statement for shareholder activism and
shareholder rights if Mr. Riccitello were to continue his tenure as
CEO of Electronic Arts without a challenge. If a high profile
chief executive essentially buys his own company, a deal like that
should be put to the highest of standards. These results are
the lowest of lows. There has not been a single developer in
the video game industry that has been purchased for anywhere near
this deal’s 840 million dollar price tag, but the fact that
it blew up…
