James Cramer: Here's What Viacom Should Do
As interested as I would be in buying the much-loved Facebook, and as fascinated as I would be at having a crack at cultivating the PC-TV watchers of YouTube (moves that could get college kids, teens, and children hooked on Viacom), I’d buy Electronic Arts first. Why? Because EA owns the 13-to-34 demo, because video games produce successful movies, and because those games will soon be sold on the Web, not in stores, and buying EA would show that Redstone’s got a jump on the technology that will make such downloads happen. What’s more, Redstone can sell embedded ads inside the video games. And as the majority owner of a much lesser interactive-games company, Midway Games, he actually understands this market. Plus, because of the dearth of new gaming systems for EA to run on (Sony and Nintendo have been late in producing new hardware), EA is cheap right now—down twenty points from its high a year and a half ago. EA could be Viacom’s MySpace without the possibility of fickle audiences going elsewhere because EA is the only game in that town, with a proven category-dominating product. Ironically, Freston paved the way for this addition by purchasing Neopets, another game company for younger kids, and one that girls love. Dovetail Neopets with EA and you’ve got boys and girls hooked before they get to college and discover Facebook.
(Via the Risky Biz blog.)