Disney joins social networking race

Walt Disney Co has acquired children's social networking website Club Penguin for an initial $350m (£172m), rising by a further $350m pending its performance over the next two years.

The membership-only website, which acts as a virtual world for children to play games, send greetings cards and chat with friends, is targeted at 8-to-14-year-olds and is entirely ad-free.

Club Penguin, which was launched in October 2005 by Lane Merrifield, Dave Krysko and Lance Priebe, has more than 700,000 paid subscribers and around 12m active users, who are mainly based in North America.

Users are given an animated penguin avatar, enabling them to move about in a snow-covered virtual world where they can interact with other members in an environment which its owners describe as a "safe haven from marketing".

It is understood that under the terms of the agreement, Club Penguin's three founders will join Disney, with Merrifield to become executive vice-president of the Walt Disney Internet Group.

The acquisition completes a busy spell of digital activity for Disney, which relaunched its website earlier this year, and bought animation company Pixar for $7.4bn in 2006.

Bob Iger, chief executive of Disney, said: "Club Penguin embodies principles that are of the utmost importance to Disney - providing high-quality family entertainment and fostering parental trust.

"The founders have woven together new technologies and creativity to build an incredibly compelling, immersive entertainment experience for kids and families."

Meanwhile, Disney has announced a 4.7% rise in net profits for the third quarter to $1.2bn, off the back of increased ad rates on the ABC TV network.

The entertainment company was also boosted by merchandise sales from two of last year's highest grossing films - 'Pirates of The Caribbean' and 'The Chronicles of Narnia: The Lion, the Witch and the Wardrobe'.

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