new boss, Strauss Zelnick, has been on the job just a few hours, but he has a plan to fix the troubled video game publisher.
Clean up the books, be compliant in accounting practices, trim excess costs with a look at possible workforce reductions, build out other businesses -- including the company's sports division -- and bring a new CEO on board within a year.
Zelnick was hand-picked by a
group of Take-Two investors, including Oppenheimer Funds, S.A.C. Capital Management, Tudor Investment and D.E. Shaw Valence Portfolios, to lead the company after a shareholder vote late Thursday
ousted former management.
A media and entertainment business veteran, Zelnick
dabbled in video games years ago, but is now handed the responsibility of turning around Take-Two.
The first order of business, he says, will be to know the company and its employees better. "We need to stabilize the company at the corporate level and give stakeholders, both shareholders and employees, comfort that we will maximize the value of the company," says Zelnick.
Shares of Take-Two closed down 96 cents, or 4.5%, to $20.14 Friday.
On his first day as the chairman of Take-Two, Zelnick addressed all employees and promised to sustain the creative process that has helped the company create the blockbuster
Grand Theft Auto
Moving forward, the goal, says Zelnick, is to ensure Take-Two becomes the most efficient and most creative of all game companies in the market.
But getting there won't be easy. Take-Two
faces a number of problems, including questions over the violent and at times racy content of its games, its ability to move beyond the
Grand Theft Auto
franchise and lower operating margins relative to its peers.
Right now, though, fixing accounting and compliance-related issues will be his focus, says Zelnick. "The company has had compliance issues, and we need to work with appropriate regulators and authorities to ensure we maintain our books right," he says.
Cleaning up the books is "very important" to Take-Two's future, says Zelnick. "For any kind of company -- public or private -- to be effective it needs to have accurate financials."
Zelnick will get all the help he needs from his ZelnickMedia colleague Ben Feder, who was named as Take-Two's acting CEO late Thursday.
Feder is likely to be in that chair for the next few months, says Zelnick.
"Before we seek to fill the CEO slot we want to stabilize morale, develop our strategy and improve the structure of the company," he says. "So, I don't think we will have a new CEO right away but I would guess we have someone in the chair permanently within the next 12 months."
Improving operating margins, an area of concern for many analysts, is likely to be the second step in his plan. Zelnick says he will need to understand the company's worldwide structure and look at overhead before making any decisions.
Though there are no plans currently for headcount reductions, it is a possibility, he says.
"We will be candid with people about that," he says. "Running the company in an efficient manner is important to us and we think running a lean corporate operation will help shareholders."
Meanwhile, Take-Two unveiled the next installment in its
Grand Theft Auto
game series, releasing a trailer for the much-awaited
Grand Theft Auto IV game late Thursday.
The franchise has proven to be a huge hit for Take-Two, but it has also raised questions as to whether Take-Two can develop a larger and more varied pipeline.
But "one-trick pony" criticism may just be the unintended consequences of having an unexpectedly huge blockbuster, says Zelnick. "Having one of the most important franchises in the video game business today creates revenue concentration," he says.
Take-Two will have to build out other businesses and the company is likely to be more aggressive around its sports division, 2K Sports, says Zelnick. "I think 2K Sports is a great idea," he says.