Shareholders Defenistrate Take-Two Execs

A shareholder revolt at video game publisher Take-Two Interactive has resulted in the ouster of CEO Paul Eibelier and appointment of a new slate of directors to the company’s board. The new board has appointed former Sony BMG executive Strauss Zelnick, of ZelnickMedia as the new non-executive chairman of Take-Two; ZelnickMedia partner Ben Feder will serve a acting CEO . The company’s board is now made up by Grover Brown, Michael Dornemann, Benjamin Feder, John Levy, Jon Moses, Michael Sheresky, and Strauss Zelnick; Brown and Levy are incumbent board members.

“Take-Two has exceptional brands and creative resources, and we are thrilled to be able to work with the many talented people within the company,” said Zelnick in a statement. “The new Board plans to put in place strategies designed to revitalize Take-Two, focus on supporting and enhancing its creative output, improve its margins and ensure that the 2007 release pipeline meets expectations. We are here to maximize the value of Take-Two for shareholders, for game consumers, and for the Company’s employees.”

Prior to the takeover, the shareholder group said it would review whether to retain CFO Karl Winters; however, the new board does not see job cuts in the company’s immediate future.

Take-Two Interactive rose to prominence on the popularity of its Grand Theft Auto video game franchise; however, the company has been mired in a series of scandals and public relations disasters in the last few years, beginning with the multi million-dollar recall and retooling of Grand Theft Auto: San Andreas over explicit sexual content hidden in the game, accounting issues, and going down in history as the first U.S. company to have its CEO convicted of wrongdoing in the issuing of stock option grants. And the company has failed to turn out new top-level hit games—which hasn’t made investors and shareholders very happy.

The new board plans to outline a plan for the company’s future in the next three to six months; analysts’ forecast the company will try to streamline business practices while exploiting remaining value in the Grand Theft Auto franchise, while focusing the company’s publishing portfolio on winning titles and franchises. A new direction may mean steering the company away from some of the controversial content it has been offering in games like Grand Theft Auto and Bully, which have consistently drawn criticism from legislators, childrens’ advocacy groups.