Disney buys popular kids' networking site

By Anick Jesdanun

updated 7:41 p.m. ET Aug. 1, 2007

NEW YORK - The Walt Disney Co. said Wednesday it has bought the popular online kids hangout Club Penguin for $350 million, adding to its portfolio a site that in less than two years has been become a rage among preteens.

Club Penguin offers a mix of games and chatting tools targeting kids ages 6-14. It nearly tripled in usage in the United States over the past year, according to comScore Media Metrix, and executives hope to expand to additional markets abroad and gain even more customers through promotions on other Disney-branded sites.

"We have been actively searching for an organization that not only shares our values and concerns for children, but also has the ability and desire to help us bring Club Penguin to more children throughout the world," said Lane Merrifield, a Club Penguin co-founder. "We've found that partner in Disney."

Although sites like Club Penguin and its rival, Webkinz, are forcing parents to grapple with how young kids should be roaming about and chatting with friends online, many Internet safety experts believe these social-networking precursors are far safer than News Corp.'s MySpace, Facebook and other hangouts for older users.

"Club Penguin embodies principles that are of the utmost importance to Disney — providing high-quality family entertainment and fostering parental trust," said Bob Iger, Disney's president and chief executive. "The founders have woven together new technologies and creativity to build an incredibly compelling, immersive entertainment experience for kids and families."

Disney said it has no immediate plans to change Club Penguin's operations, which will continue to run from Kelowna, Canada. Club Penguin has more than 700,000 subscribers paying about $5 a month. A free version lacks many features popular with kids, including the ability to decorate a virtual igloo.

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