Strauss Zelnick and the Take-Two Takeover With No Money

David Senra: Can you run through how you wound up buying and taking the deal to get Take-Two Interactive?

Strauss Zelnick: You know, interesting, it's not a story that we've told, and part of the reason is, stories like this tend to be sort of self-serving because it worked out well, and not everything works out well. In fact, most deals don't happen, and deals that do happen don't always work out. But this one did. It's kind of a set of one of one. The way we did this deal has never happened before, and I'm pretty certain it will never happen again because we essentially did a hostile takeover with no money.

The reason we did that is we had no money, so it was really our only choice. But I had a background in the video game business, and started ZMC with partners, and the goal of ZMC was to buy, in certain instances, turn around, and in all instances, build up and create value, and companies that stood at the intersection of media and technology. The idea in 2001, when we started the business, was that technology would supercharge media and create lots of value and destroy value. That's a story now that's more resonant than ever. Zelnick thought in 2001 it was pretty obvious, but it was non-obvious to the entertainment business at the time.

Zelnick got his start at Columbia Pictures in 1983 in international television distribution, and became the company's new media executive almost by accident, chosen as the least senior person the studio could spare for the assignment. His graduate thesis had been a history of electronic entertainment dating back to 1895, which gave him a long run frame for spotting how new technology displaces old media. From Columbia he moved to Vestron, the largest independent home entertainment company, becoming its president at 29. He was recruited to 20th Century Fox by Joe Roth in 1986, becoming president at 32 under Barry Diller and Rupert Murdoch, and led the studio from last place at the box office to first.

At Fox, Zelnick came to understand the economics separating a studio system, where creative talent is on payroll, from a boutique system, where talent auctions its services project by project and the studio bears the downside of failures while talent captures much of the upside from hits. He concluded the film business had become a bad boutique system business since a 1955 consent decree, while video games remained a favorable studio system business, leading him to describe wanting to run the moral equivalent of a 1920s movie studio, which he identified as the video game industry.

After leaving Fox, Zelnick asked Rupert Murdoch for equity to start a video game venture and was refused, since Murdoch does not take on partners. Zelnick instead joined Crystal Dynamics, a Kleiner Perkins backed startup, taking a 95 percent pay cut. He later moved to run BMG, the recorded music company, where he was permitted to start an internal video game division before taking the job. That division, built with roughly 40 million dollars against BMG's five billion dollar annual revenue, was shut down against Zelnick's advice by incoming Bertelsmann CEO Thomas Middelhoff. The resulting 20 percent equity stake in the small public company that acquired the division, later sold for 14 million dollars, would become shares in Take-Two Interactive, whose first release turned out to be the original Grand Theft Auto.

In 2001, Zelnick started ZMC with 300,000 dollars of his own money and no outside capital, operating from borrowed office space with one fewer chair than employees. The firm's first deal, a turnaround of the troubled Japanese record label Columbia Music Entertainment introduced through Ripplewood partner Jeff Hendren, produced a roughly 22 percent internal rate of return over nine years and became the foundation for ZMC's subsequent growth.

By 2007, ZMC had done six deals but remained what was then called a fundless sponsor. Zelnick had cultivated a long standing, largely unpaid relationship with activist investor Carl Icahn, bringing him investment ideas including an early tip on Reader's Digest. Icahn eventually directed Zelnick's attention to Take-Two Interactive, a company at that point under investigation by the IRS, SEC, New York District Attorney's office, and FTC, with an indicted chairman, a canceled annual meeting, unfiled financial statements, roughly 700 million dollars in revenue, heavy losses, and about 50 million dollars in cash. Zelnick's team wrote memos twice recommending against involvement.

Icahn then told Zelnick to read Take-Two's bylaws. Ben Feder discovered the company had a plain vanilla, unamended Delaware corporate charter allowing a majority of shares physically present at the annual meeting, rather than a majority of all outstanding shares, to vote out the board without any advance proxy filing. Because roughly 70 percent of Take-Two's stock was held by just ten shareholders, an SEC exemption allowed Zelnick's team to solicit those ten directly without triggering formal proxy requirements. The team secured commitments representing 48 percent of shares, then discovered many of those shares had been loaned to short sellers and could not be voted, leaving an actual position of roughly 22 percent going into the meeting. At the meeting itself, an unplanned conversation revealed that Fidelity, a large uncommitted shareholder, appeared unlikely to oppose the takeover. The company's general counsel reported a provisional vote of 88 percent in favor of Zelnick's slate, and Zelnick became chairman the next morning, with Ben Feder serving as CEO from 2007 to 2011 before Zelnick took over as CEO himself.

Zelnick's turnaround plan centered on the one strong asset, Grand Theft Auto, then in development, while cutting roughly 40 million dollars in costs. His method avoided immediate headcount cuts, instead starting with a top ten vendor survey to renegotiate contracts, which saved money without alienating staff or new expense policies, and only addressed overhead reduction three to six months in once the business was better understood. Zelnick describes only pursuing turnarounds where his team is the first to attempt one, reasoning that a prior failed attempt by capable people suggests the obvious moves will fail again.

Take-Two's stated strategy became to be the most creative, most innovative, and most efficient company in the entertainment business, the same rubric Zelnick had applied at every prior company he ran, in service of a stated mission to be the number one entertainment company on Earth. Central to this was a pitch to creative talent: Take-Two would fund their creative vision, stay out of the way, and run a calm, well financed, rational organization free of the chaos that had defined the company before the takeover. This promise was tested directly when a division head asked to fund a costly art style rebuild of a game close to release, a decision Zelnick supported that became the hit franchise Borderlands.

Zelnick describes his approach to difficult, highly talented creative personalities as rooted in genuinely caring about people, a discipline he traces to reading Dale Carnegie's How to Win Friends and Influence People while at Fox, after avoiding the book for years due to its title. He credits the book with shifting his approach from self focused anxiety about how he was perceived to sincere interest in others, illustrated by Carnegie's own story about complimenting a postal worker's hair. When a talented but disruptive colleague's behavior became untenable, Zelnick describes learning to simply delete the person's most provocative emails unread rather than escalate conflict, eventually parting ways once the relationship's value no longer justified its cost.

On artificial intelligence, Zelnick describes Take-Two as running roughly 200 internal AI projects alongside licensed enterprise access to tools including ChatGPT and Claude, reporting to CTO David Kline. He is skeptical, however, that AI meaningfully changes the difficulty of creating genuine hits, distinguishing between asset creation, which AI accelerates, and hit creation, which by definition depends on producing something unexpected rather than derivative of existing data. He notes that cloning technology to replicate a game like Grand Theft Auto has existed for years without AI, and that clones do not sell regardless of how quickly they can be produced.

Grand Theft Auto VI is confirmed for release on November 19, 2026, roughly 18 months behind its original announced date. Zelnick describes GTA as likely the most valuable entertainment intellectual property ever created, while noting that Take-Two does not disclose total revenue figures for individual titles such as Grand Theft Auto V.

The interview closes on Zelnick's philosophy of ambition and visualization, distinguished explicitly from magical thinking. He describes the practice as concentrating hard, exclusively, and frequently on a specific, quantified goal, citing his own stated early target of building a 20 billion dollar company at ZMC's founding, a goal he says the firm has since exceeded, with the business discussed in the conversation as being worth somewhere between 35 and 40 billion dollars today. He closes by describing his approach to leadership as fundamentally a service orientation, treating every interaction, from a creative executive to a barista, as an opportunity to be useful rather than to extract value.