SCi Entertainment looks for financing

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Video game firm SCi Entertainment is continuing to look for a possible capital injection in talks with current minority investor Time Warner and others, according to sources. But NBC Universal is seen as unlikely to step up as a financier.

The parent company of game publisher Eidos, best-known for its "Tomb Raider" franchise, has been struggling and looking for new financing.

In mid-January, Jane Cavanagh quit as CEO after release delays and takeover talks came to an end. Phil Rogers, previously CFO, took over her post.

Among the delays in key games was the one of the latest "Tomb" title into 2009.

A U.K. press report Thursday said SCi management has been in talks with TW and General Electric entertainment arm NBC Universal.

A TW spokesman declined comment. NBC Uni officials weren't available for comment.

However, a source familiar with the situation said an extension or possible expansion of the TW investment makes sense because the conglomerate already holds a 10.3% stake in SCi.

While the firm has also talked to NBC Uni, the GE arm "would have trouble getting it through their GE board," the source suggested. After a big first-quarter earnings miss by GE, management at the industrial and conglomerate has come under pressure to show better performances and stay disciplined.

Also, joint investment have rarely worked out well for media and entertainment companies.

Some observers have suggested that a white knight, such as a private equity or other gaming firm, could come in and save Eidos/SCi by taking it private. One source estimates this would cost only $300 million.

Any such buyer "would want to get Time Warner out of it, they'd want to (investor) Robert Tchenguiz out of it, they can't have those people hanging around making decisions," the source said.

Ubisoft Entertainment last year approached SCi about a deal, but ruled itself out in October.

TW invested in SCi in late 2006 via Warner Bros. Entertainment, but it has focused on developing its gaming business via license deals. Many conglomerates also have sold minority investments or taking them to full ownership to clear up complicated and passive ownership stakes.

Shares of SCi closed down 2.7% at 0.62 pounds ($1.24), giving the company a market capitalization of about 54 million pounds ($107.5 million).

David Ward reported from San Diego; Georg Szalai reported from New York.
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