On a call with Disney CEO Bob Iger now while he announces the company’s acquisition of Club Penguin, which he describes as a perfect fit. It’s a cash payment of $350 million and an opportunity to earn out an additional $350 million between now and 2009.
The virtual world for kids 6-14 launched in Canada in 2005 and claims 700,000-plus paying members; subscriptions run about $6 or $58 a year. The site also makes money from virtual goods and other online merchandise sold through the site.
Founders Lane Merrifield, Dave Krysko and Lance Priebe will join Disney and remain the senior execs responsible directly for Club Penguin. Former Disneyland employee Merriefield, now the CEO, will be an EVP of the Walt Disney Internet Group reporting to WDIG president Steve Wadsworth. The founders are the only shareholders; each stands to make $115 million. More after the jump…
The combination of Disney and Club Penguin made sense all along but Disney seemed to be more inclined toward growing its own communities — Toontown (2003), Disney Fairies (launched in 2007 with a game coming in 2008), the upcoming Pirates — in house. Iger said the company is still committed to that strategy and thinks it will be successful but sees in Club Penguin a successful standalone business. With the exception of changing the name to include Disney and supporting the company, Iger promised: “Club Penguin is going to continue to exist as is. … The experience will not change at all. It will continue to evolve.” Iger added: “We really don’t intend to get in the way of that or do anything by virtue of the way we own it.”
For those of you just tuning in, we reported in May that Sony was in advanced talks to acquire the virtual world for what we were told was about $450 million, roughly a 7.5 multiple based on projected revenue of about $60 million — which struck some people then as high. But we were told then the self-funded company is already profitable and operating at about 50 percent margin