EA went private on Tuesday, and the bill is already coming due. According to Bloomberg's Jason Schreier, the publisher has told the investors funding its $55 billion buyout that it plans to cut $700 million in annual costs, and $170 million of that sits under the heading "organizational efficiencies." If you've followed this industry for more than a year, you already know what that phrase tends to mean.
What's actually confirmed
The hard numbers first, because they're the part that isn't guesswork. The take-private deal, led by Saudi Arabia's Public Investment Fund alongside Silver Lake and Affinity Partners, closed on August 4 and ends EA's 36 years as a publicly traded company. To get there, EA is carrying roughly $18 billion in debt, which reportedly works out to about $1.8 billion a year in interest alone. The $700 million cost-cut target is what EA has told its new lenders it will deliver.
The part that's a read, not a fact
"Organizational efficiencies" is corporate for "we have too many people." Schreier's take is that the $170 million line points straight at workforce cuts, and he's rarely wrong on this beat. EA hasn't announced any layoffs yet, so treat the scale and timing as unconfirmed. But a company that just took on $18 billion in debt and promised its lenders $700 million a year in savings doesn't usually find that money down the back of the sofa.
Why it matters
EA employs thousands across DICE, BioWare, Respawn, Motive and its sports studios. When a newly private company has debt that size to service, the people making the games are usually the first line on the spreadsheet. We'll update this the moment EA attaches real numbers to it. For now: the cost target is real, the layoffs are the widely-expected consequence, and nobody at EA is having a relaxing week.
Comments · 0