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Warner/SCi deal doesn't make much sense - Pachter

Wedbush Morgan analyst queries the logic behind Warner's thinking, on a deal that only appears good for SCi

Wedbush Morgan analyst Michael Pachter has questioned the logic behind this morning's announcement of the strategic partnership between Warner Bros and SCi, giving particular attention to what Warner is set to gain from the deal.

"None of this really makes all that much sense to me," he told GamesIndustry.biz. "Warner is doubling down for less money and SCi gets a temporary boost. It isn't clear to me that this is enough cash for more than a year and a half of operations.

"It doesn't appear strategic at all, since all Warner Bros gets is a larger minority interest in a weak company, and they don't benefit in any meaningful way from the distribution deal."

But while the advantages for Warner Bros might seem vague at this point, he believes it's a good move for SCi.

"It's great for SCi, as they remain independent at least until they get in trouble again, and it's definitely a vote of confidence in new management."

However, despite that, the share price dropped this morning by 17 per cent, and Pachter offered some explanation.

"I don't see how it helps shareholders or share price in any meaningful way, nor do I see it as a signal about Warner's ambitions. They bought Traveller's Tales for more than SCi's market value, so they are clearly willing to invest in development talent.

"It seems odd that they don't pursue game IP, although perhaps they intend only to make games using Warner Bros IP."

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Phil Elliott

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