Report: Time Warner Pursuing Stake in SCi/Eidos

October 23, 2006 | By: James Brightman

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Financial publications are reporting that a deal between Time Warner and SCi Entertainment is imminent. If the report holds true, Time Warner would acquire a ten percent stake in the video game publisher behind Lara Croft. [Updated]

According to British publication The Business, media giant Time Warner has been in talks with U.K. video game publisher SCi Entertainment (which owns Tomb Raider maker Eidos) to purchase a ten percent stake in the company.

The report, which cites "Wall Street sources," claims that initially Time Warner had been looking to make a full bid for all of SCi, but the conglomerate had to put that on hold because it's been dealing with a share buyback plan and further restructuring of its AOL business.

The sources indicated that through its Warner Bros. subsidiary, Time Warner then tried to negotiate for a 20 percent stake in SCi. However, Citibank, which has been advising SCi, was able to scale that back to ten percent. The report stated, "Barring any last-minute hitches, an announcement is expected soon." Warner Bros. is reportedly trying to be friendly because it wants to work with SCi management.

If the deal is made, it could be quite beneficial to SCi. The publisher would be able to create games based on popular Warner Bros. properties such as Tom and Jerry, Bugs Bunny and others, and SCi would also benefit from Warner Bros.' distribution network and expert merchandising skills. Moreover, SCi would of course be exposed to Time Warner's gigantic investor base.

Currently, SCi chief executive Jane Cavanagh holds a 6.3 percent stake in the business. And this past January, Iranian property tycoon Robert Tchenguiz acquired a 16 percent stake in SCi.

One source told The Business, "Whatever they decide to do, the two parties have to agree because they need to work together going forward. This is more about taking the business on to a different level than just a pure investment."

GameDaily, as you know, was recently acquired by AOL and therefore falls under the Time Warner umbrella. We've reached out to the bigwigs at Time Warner and we'll update accordingly. Stay tuned.

[UPDATE] We were in touch with Edward Adler, Executive Vice President of Corporate Communications at Time Warner, and could only get the usual "we do not comment on rumor or speculation" from him. Looks like we'll have to wait and see like everyone else on this one, despite being in the Time Warner family.