Burbank, Calif. – Moving to increase its online presence among children, Walt Disney Co. said Wednesday it was buying the Club Penguin virtual community in a deal worth as much as $700 million.
The purchase gives the media giant an immediate foothold in social networking, a business that the larger media companies have been increasingly drawn to in the wake of News Corp.’s 2005 acquisition of .
Disney said it would pay $350 million in cash for the website aimed at 6-to-14-year-old children and up to $350 million more if the Canadian company’s founders reach profit targets through 2009.
“This is exactly what Disney should be doing: looking for ways to leverage its strong balance sheet into areas where it doesn’t have the expertise it needs to maximize the opportunities,” said Richard Greenfield, analyst at Pali Research in New York City.
The announcement came the same day as Disney exceeded Wall Street expectations with its third-quarter earnings. Net income rose 5 percent to $1.2 billion, 57 cents a share, in the period that ended June 30.
