Take-Two reveals EA bid cost, earnings breakdown

SEC filing reveals publisher spent $11.1 million blocking takeover; 82% of earnings from current-gen consoles, with PS3 the top earner; ZelnickMedia paid $2.5 million management fee.

On Wednesday, Take-Two Interactive reported a record $1.5 billion in annual revenues and $97 million in annual profit, but saw its stock slide due to lower-than-expected quarterly earnings. Today, the New York-based publisher revealed the details of its 2008 fiscal year, which ended October 31, via a filing with the Securities and Exchange Commission (SEC).

Buried among the facts and figures were a series of interesting bits of information about the company. First, Take-Two spent a not-so-small fortune staving off the advances of Electronic Arts, which gave up its seven-month-long takeover bid in September. "We incurred $11.1 million of costs in 2008 related to the EA Offer and our strategic review process," the publisher reported.

Spearheading the defense against EA's bid was Take-Two chairman and Men's Fitness cover athlete Strauss Zelnick (pictured), who presided over the company's roller-coaster ride on the NASDAQ stock market. When EA first offered $26 for each of its rival's shares, the Grand Theft Auto IV-maker's stock price went from $17 to a 52-week high of $27.95 on June 2. Once EA walked away, though, the bottom dropped out of Take-Two's share price, which was below $8.50 as of press time.

Although some executives would be fired over such a dramatic devaluation, Zelnick is instead being handsomely rewarded. Though his official annual salary is just $1, his company, ZelnickMedia, was paid $2.5 million in "management fees" by Take-Two during its last fiscal year. It also received a restricted stock grant of 600,000 shares that will vest over the next three years. Additionally, if Take-Two meets certain performance requirements, ZelnickMedia stands to receive an extra $2.5 million, and a 900,000-share, four-year vested stock grant.

Speaking of earnings, Take-Two's SEC filing also dissected its sources of revenue. Some 82.3 percent of its net publishing revenues comes from current-generation platforms. Of that, the company took in $347.0 million from PlayStation 3 games, $281.5 million from the Xbox 360, and $112.0 million in Wii sales. The former two figures were driven by GTAIV, whereas the latter owes its success to Top Spin 3, Major League Baseball 2K8, and the Carnival Games casual series. Interestingly, Take-Two considers the DS a previous-generation system along with the PlayStation 2.

Territory-wise, 43.5 percent of Take-Two's annual take came from outside North America, up from 34.7 percent the year prior. The company made $33.2 million from its deal with Capcom to localize and sell Grand Theft Auto games in Japan. Annual earnings rose by $20.4 million thanks to the strength of foreign currencies, with Take-Two crediting the surging Canadian dollar as a major factor.

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Discussion

92 comments
00Rambol00
00Rambol00

Havent EA got enough money? EA obviously want more if they wanted to buyout TakeTwo, GTA IV sold quite well

tyzwain
tyzwain

Lol well if they're really hitting it with the costs of the EA take-over, I'm sure microsoft payed a pretty price ti get exlucisve DLC for GTAIV. Only thing that annoys me is that its free for PC users.

campbell1874
campbell1874

Gamer1729 what are you talking about. The PS3 had more games released last year from Take-Two meaning some of the other games had to make up some of the total.

Gamer1729
Gamer1729

"$347.0 million from PlayStation 3 games, $281.5 million from the Xbox 360, and $112.0 million in Wii sales" to me implies there is something really worng with GTAIV exlusive content on the Xbox 360.

Mr_Versipellis
Mr_Versipellis

Yay! Take that, EA! Oh, if only they hadn't taken over BioWare... You know thae scary thing is that if EA had succeeded The Elder Scrolls V could have come out with an EA badge... AHHHHHHHHHHHHH!

CY4N1D3_625
CY4N1D3_625

I agree with VenomRitual; EA ain't a bad publisher, it's just with them trying to swallow up some really good developers (T2, Bioware), just goes to show that EA couldn't make a good game for themselves if they tried. They used to be alright....

auspicious12345
auspicious12345

hahahaha, not profitable to publish on ps3 eh? what now brown cow?

Myzz617
Myzz617

PS3 FTW??? Lmaoo oo boy let me hear it? NAU ftw as out dollar will suck for years to come.

VenomRitual
VenomRitual

11.1 million cost that they didn't plan for. ugh EA. great publisher, but this defenitely cost you karma

donscrillinger
donscrillinger

the 360 is an very nice system and i have every game 2k and rockstar makes on it .. thx you for making games i LOVE 2K .Now only if they could get that NFL deal on the Table Agian ...

jimbob_1977
jimbob_1977

@angelcage-2: ps3 have exclusive dlc for bioshock - what more do you want?

AngelCage-2
AngelCage-2

So, PS3 gives them more money that 360, but Still, ps3 orners don't have any sign of DLC.... way to go Take Two.

Wings_008
Wings_008

actually this is a good thing (for us of course) because it will mean more games and much more refined material over the next year

gerardlindsay
gerardlindsay

Guys, keep in mind the operating year of interest. The higher PS3 revenues may very well be explained by titles such as BioShock (by 2K games, a subsidiary of T2 as is Rockstar). BioShock on X360 (and PC) released more than a year prior to the (recent) release on the PS3. In other words, BioShock's sales in this period may predominantly accrue from the PS3 and consequently boost T2's earnings attributed to that platform. All in all, further digging must be done before firm conclusions can be drawn about the data on T2's revenues. (Hmmm........At the same time no other BioShock-like examples come to mind........Anyone?)

mark_unix
mark_unix

their profits only prove microsofts numbers aren't right, and goes to point there are actually more PS3's in use. i suspect microsoft has been upping it's sales numbers thanks to the red-ring-of-death, and microsoft is stuck with 5million defect consoles they add as being in use (while not only take2's sales show there are already more PS3 actually in the hands of users)

Mike_Labeckio
Mike_Labeckio

I'd like to see a story about EA's stand on maintaining League and player licences. As stated in another artical about EA looking to change the way the consumer views them as a company, EA seemed to be disheartened by the rising cost of Sport licences. I wonder if there might be a change to the way they do buisness to include or maybe adapt a partner ship in owning these licences. Split the cost and bust their butts to get the consumer dollar, while maintaining a matching price point as to not create annomosity with a prospective licence partner.

Locuzt
Locuzt

Why is it ok for Blizzard to monopolise the game industry but not EA? seriuosly, Take-two will prop be bought at some point, only question is by whom? Blizz or EA?

hugociss
hugociss

it is better for us (costumers) if take-2 continues to work independatly, it encourages both rivals to make their games better than the other, furthermore, we would get the both of sides if they do not merge.

eortlieb
eortlieb

CMakaCreative, And if it goes down to $4.25, you've just lost half of your money. Don't bet on this stock unless you've got some extra Christmas cash that you wouldn't mind losing if worse comes to worse.

dark_monk56
dark_monk56

Well, at least that attempt on monopolizing the gaming industry failed. Probably only 200+ more attempts on EA's behalf to go. Still, it dealt a massive blow to EA's share prices, which will hopefully get them to reign in their expansionist tendencies a bit.

shakensparco
shakensparco

1. Consolidation of game companys is bad. More competition means better games. 2. A 1$ salary? Zelnick must be getting loads of money from his media company. 3. The PS3 probably outsold the 360 due to the fact that the PS3 doesn't have very many good games. So when a good one does come out, everyone gets it, unlike the 360 where people have to divide their money and prioritys. Not being a fanboy. Just saying it how it is.

CMakaCreative
CMakaCreative

With their stock at $8.50, it could be a steal to start getting TT stock. If it bounces back to at least $17 a share, you just doubled your investment.

DaddyWarbucks
DaddyWarbucks

MAKE ANOTHER APF GAME!!!! i cant wait until nfl 2k makes its triumphant return. madden has destroyed football gaming and im bored.

RetroGamer34233
RetroGamer34233

Some of you may be right about them selling more copies of GTA IV on the 360, but that may be domestic numbers, not international figures, where console sales may be shifted toward the PS3 over the 360. Notice in the last paragraph that 43.5 percent of the TT"s annual take came from outside North America, which could be the reason PS3 sales came out ahead. Otherwise, there are numerous fees and such that get paid to console makers so their games can be featured that we may not even be aware of. Of course it's only a theory of mine.

x-2tha-z
x-2tha-z

Jmartin More copies were sold on 360 than PS3.

jmartin1016
jmartin1016

It's interesting. PS3 owners were hurting for a killer app in april. So more PS3 owners went out and bought GTA4. 360 owners were still playing Halo3 Bioshock, Mass Effect, Lost Oddyssy, and other, at the time, exclusives.

goldeneye_basic
goldeneye_basic

@ ItchyIsVegeta, EA wanted to buy Take Two so they could kill off 2K games. Then they wouldn't have to pay the NFL for exclusive rights anymore and they would get the exclusive rights to MLB. EA buying Take Two would have been a bad thing for competition. We never would have seen another 2K sports game again.

valcrist09
valcrist09

wait i thought 360 outsold ps3? i thought it was like a 55% to 45% margin between the 2 systems? unless it sold more in the long run...

Strigidae
Strigidae

[This message was deleted at the request of the original poster]

Strigidae
Strigidae

[This message was deleted at the request of the original poster]

grigjd3
grigjd3

The numbers seem backwards for the consoles. Didn't GTAIV sell more on the 360?

sillycatfish
sillycatfish

more so what im trying to say it TT owns 2K which is EA's biggest competitor

sillycatfish
sillycatfish

green, take two and EA are the only companiespumping out major league sports games yearly EA would love a monopoly on that wouldnt they?

green_dominator
green_dominator

Whatever motives EA had to attempt a take over I'm glad it stopped. If Rockstar or Take-Two ever gets bought out I'd stop buying their games right then. I never want to see another logo next to GTA other than Rockstar and Take-Two.....

Lucidmike78
Lucidmike78

On another perspective, this tells me that Rockstar is confident that their shares will be worth a lot more than $27.95 in the near future. I'm sure they have a lot of cool stuff in the works.

pcmacro
pcmacro

Well said ChronoDeus.

TurambarGS
TurambarGS

I'm rather surprised at TT's profit margin. On revenues that big, to only be dragging 10%-ish in profit, on a traditionally high value added product, you've gotta wonder how they're managing to incur so many expenses. I'm all for diversity in publishing (because it should mean that the consumers win) AND I haven't been the hugest fan of EA in the past (I'll wait and see if their new 'quality of quantity' theme sticks) but it certainly does seem like TT is being mismanaged to some extent. Merger or not, I'd hate to see them go under, so I hope they don't tank and become easy pickings for a hostile takeover.

ChronoDeus
ChronoDeus

"Once EA walked away, though, the bottom dropped out of Take-Two's share price, which was below $8.50 as of press time." Umm, this comment doesn't really accurately reflect reality. Once EA walked away, Take-Two's stocked dropped to a little below what it was before the offer, while EA's continued to drop from it's own high points. Then the economy went to hell, and stock market collapsed a few thousand points, and EA's stock crashed way down really quickly, while Take-Two only had a slow stead decline with nothing really dramatic happening until until this. In short Take-Two's stock is down due to the economy sucking, not because they refused to be bought out by EA.

hohohoyes
hohohoyes

Man, I'm starting to wonder if EA never planned to buy Take-Two at all.. I mean, what better way to kick a competitor right in the 'nads than to skyrocket their stock, then have it plummet down towards the earth. Sounds like a episode of DBZ...

makemeweak
makemeweak

The guy tanks the stocks while quashing a takeover bid, costing the company $11 million and he gets $2.5 million in fees? I need that job! Here - I'll waste your money, and lose your money. Then you pay me for it.

chikahiro94
chikahiro94

@ khai411 Excellent question. I've been wondering that myself. It could be that, or it could be Sony lowered their licensing fees?

ItchyIsVegeta
ItchyIsVegeta

I was kinda hoping they would get bought out. Im a big fan of the old NFL 2K games. This would put them in the position to make future NFL 2K games, with EA holding exclusive rights.

khai411
khai411

Strange, EA and T2 earn more from their PS3 games even though they usually sell less there. I would think the blu-ray's production costs would warrant a lesser gain on the PS3. Is there a possibility that the X360 fees are much more?

DrKill09
DrKill09

I really wouldn't care if EA bought Take 2 anymore to be honest. 2k Sports' games aren't that good. I'll take NHL 09 over NHL 2k9 any day of the week... and other than that series, I don't like EA's sports games. They are far too stiff. Still better than 2k's games, though. And as far as Rockstar is concerned, they released their best games years ago.