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Rumor: Electronic Arts up for sale, Bethesda’s owner buying

EA up for sale

WTS: One behemoth video game publisher. Assets include global monopoly on licensed sports video games including FIFA and Madden NFL, PopCap Games (Bejeweled, Plants vs. Zombies). Will include runner-up military shooter franchises Medal of Honor and Battlefield so buyer can feel like second prettiest girl at the prom every November. Bonus: Respected Western RPG maker BioWare included, but buyer must also upkeep failing MMORPG Star Wars: The Old Republic (success of impending free-to-play shift not guaranteed.) Willingness to ruin legacy intellectual property with subpar product (see: SSX, Syndicate) recommended.

Those pesky rumors that Electronic Arts is up for sale are back once again. This time the New York Post is reporting that the Sims and Tiger Woods PGA Tour publisher is hunting for a buyer, though one of its sources says, “It’s early days.”

EA’s initial steps were to approach private-equity firms Providence Equity Partners and KKR about a possible sale. Providence Equity Partners would find itself one of the biggest players in the global video game market once it had EA in its well-lined pocket. The firm already owns a major stake ZeniMax, the publishing umbrella that includes Bethesda (Skyrim, Fallout) and id (Doom, Quake).

How attractive EA is though is a matter of optimism and perspective. The buyer needs to answer the billion dollar question: Is EA’s business going to turn around. Over the course of 2012, EA’s shed 37 percent of its value, its market cap dipping down to just over $4 billion. Shares in the company traded at close to $50 back in 2008, when boxed copies of The Sims 2 were still flying off shelves. Today, they trade just above $13. The Post’s source said, “[EA’s] made it known they’d do a deal at $20 a share.”

The publisher’s worked overtime to turn itself around in the past couple of years, aggressively adapting to a world where people are more likely to spend a buck on an iPhone game instead of $60 on a disc at Best Buy. Just this week EA announced that it’s making major retail releases like Command & Conquer: Generals 2 into free-to-play games instead, banking on people spending small amounts with greater frequency than on a single game purchase. CEO John Riccitiello has done his best to make EA’s recovery swift, but since its value continues to spiral down, shareholders are understandably losing confidence in him.

EA is an intellectual property treasure trove and its business infrastructure is second to none. Any potential buyer knows the truth though: It’s full recovery isn’t guaranteed, no matter how many copies Madden NFL 13 it sells.

Update:  This article has been updated to correct an error that incorrectly identified Providence Equity Partners as the majority shareholders of ZeniMax. Christopher Weaver, Bethesda founder and ZeniMax co-founder, is the majority shareholder.