This story was written by Matt Kapko.
Would Disney (NYSE: DIS) consider buying Electronic Arts? That's the suggestion being floated by Heard on the Street's Martin Peers at the WSJ. With EA's stock at its lowest point in more than seven years, competitors and other media giants may decide that now is the time to try to grab the games maker. Any suitor would also gain an immediate upper-hand in the mobile space, with EA becoming the No. 1 mobile game publisher soon after it acquired Jamdat in 2006. Peers argues that Disney makes the most sense because EA's largest assets include sports titles that would fit nicely with Disney's ESPN cable network. It would also allow Disney to save the $200 million that it spends each year to develop its own games. Peers: "Disney would be gutsy to step up during the current economic uncertainty. But it might be better than waiting for better times and paying top dollar."
And yet, such a plan would be complicated by the same factor that has dampened M&A activity for months now: credit markets are frozen and companies are having trouble borrowing the cash needed to push a deal through.
Let's not forget that EA is going through some belt-tightening of its own. Following last week's earnings reports, the company said it would be cutting about 540 employees. While EA Mobile's revenues jumped 24 percent, the company's wireless-related business still only accounts for about 5 percent of overall revenues, which is down slightly from 6 percent a year ago. An EA spokesperson wouldn't say exactly how many jobs would be lost in the mobile division, but the entire company will be feeling the pinch: "The recent cuts were made across the board, impacting all departments, labels and geographies. That includes the EA Casual Entertainment Label, which includes our mobile gaming unit."
By Matt Kapko