Comcast makes offer to merge with Disney

[WDSearcher]

Originally posted by noblemickey
This truly saddens me. It won't be the same going to WDW owned by Comcast or some other outfit. I don't think the offer is yet rich enough for the Directors and/or shareholders to support as of yet. Another bidder will probably come in which will up the price which may lead to Comcast offering more or the new bidder getting the Walt Disney Company. This was probably inevitable but it still saddens me. Business is business but the Mouse had a special place in my heart.

Well one would hope that if the stockholders are all rallying behind Roy to "save disney" (dot com), that they would not immediately then vote to sell disney. Since selling hardly ever equals saving.

However, it'd be swell if Disney looked at this as a perfect opportunity to get rid of the broadcast businesses (although ESPN does very well for the company) and some of the movie stuff, and maybe even magazines and other media. Bring in some cash and pump it into the parks, Disney Animation, and ME's severance package. (Provided there's someone in place to take over what would once again be a Theme Park-based company.)

 

[JDH]

any indication of future events then Comcast has shown that they have their duck's in a row and usually get what they have gone after.

I still think they are players involved here that are not showing their faces.

 

[Disneycrazymom]

While I won't even pretend to understand a complicated deal such as this, I just want to cheer on Roy and Stan! I so hope they are in all of this somewhere!

 

[WDWHound]

Originally posted by Jestocost
The letter doesn't mention the parks except in the part where it mentions the parks.

You're right, I missed that.

 

[Luv2Roam]

don't think the offer is yet rich enough for the Directors and/or shareholders to support as of yet.

I agree, and I am sure most of us do.
This really just throws their hat in the ring and openly shows their intentions. It also brings other players to the table.
The board, Ei$ner and now the world know the serious condition Disney now is in.
This may even be a case of you can't get what you want. But you might be able to get what you need.

 

[wtg2000]

Do you think if the bid fails it will strengthen Eisner's position and weaken Roy and Stan, give ME a victory to rally around?

 

[tfc3rid]

I think the opposite.

 

[Experiment626]

Comcast did a press conference this morning (11am EST) and have the slides and a replay of the audio online:

http://www.pressnews.net/cmcsa/

Its about 45 minutes long including a Q/A session at the end. They certainly are saying the right things to court many of the
the 'savedisney' crowd.

Note slide #12:
* "Empower Disney animation to build on a legacy of success"
* "Restore energy and creativity in attractions, hotels, and concessions"

 

[YoHo]

The game is afoot.


This was inevitable. It is kinda fun though to watch the wailing and Nashing of teeth from those that were previously convinced that Emperor Eisner really really was wearing some nice cloths.

At least, it will be fun as long as things work out to the betterment of the parks and animation in the end. The rest of isney can take a long walk off a short pier anyway.

 

[BRERALEX]

Business - AP

Walt Disney to Study Comcast Merger Offer
Add Business - AP to My Yahoo!


By SKIP WOLLENBERG, AP Business Writer

NEW YORK - In a stunning move, cable TV giant Comcast Corp. proposed Wednesday to buy Walt Disney Co. for stock valued at about $54 billion. The Disney board said it would study the offer, which would create the world's largest communications company.


Comcast, the nation's biggest cable systems operator, said Disney chief Michael Eisner had rebuffed its request to talk earlier this week.


Comcast's proposal was made as Eisner is fending off criticism from former board members Roy E. Disney, nephew of founder Walt Disney, and Stanley E. Gold about his performance and lack of a succession plan as Disney's chief executive. Michael Citrick, spokesman for Disney and Gold, declined to comment on Comcast's proposal.


"This is a very exciting moment," Comcast chief executive Brian Roberts said in a conference call with investors and analysts. Roberts said the combination "would create one of the world's premier entertainment and communications companies, and, we believe, restore the Disney brand to prominence and the company to growth."


"The ball's in Disney's court," Roberts said.


Disney's board of directors released a statement later Wednesday saying it had received Comcast's offer and would "carefully evaluate" it. "In the meantime, there is no action for shareholders to take," the directors said.


Disney, which owns ABC and ESPN, and Comcast, whose businesses include the Philadelphia Flyers hockey team, together had $45 billion in revenues last year. Time Warner Inc.'s $39.6 billion in revenues last year made it the world's largest media and communications company.


In a news conference in New York, Roberts said he hoped to make the deal "as friendly and amicable as possible, as fast as possible," but he also noted that he was ready to abandon the proposed merger if need be. "We've walked away from big things before. Life goes on," Roberts said.


Paul Kim, senior media analyst at Tradition Asiel Securities, said that while Roberts' bid for Disney was not surprising, the timing was.


"It's going for the jugular," he said. "He is using this vulnerable time to force Disney's hand."


Kim also said Comcast is basically a cable company, and might be biting off more than it can chew. "I think they underestimate the complexity of being a broad-based media company," he said.


Comcast released a letter sent to Eisner indicating that Eisner had personally rejected Roberts' offer to enter into merger discussions earlier in the week. Roberts' letter called Eisner's refusal "unfortunate."


"Given this, the only way for us to proceed is to make a public proposal directly to you and your board," the letter stated.


On Comcast's conference call, Steve Burke, head of the company's cable division, told investors that Comcast believed it could greatly improve the performance of several of Disney's key businesses, including ABC, the ABC Family channel, animation and theme parks.


"We think job one is restoring the company to its previous levels of profitability," said Burke, who had worked at Disney for 12 years.


Under the merger, Comcast said it would issue 0.78 of a share of its Class A stock for each Disney share, and Disney shareholders would retain 42 percent of the combined company.


The deal values each Disney share at $26.49, a 10 percent premium over their closing price Tuesday.





In a sign that investors expect a nasty fight, Disney's shares shot up $3.27, or 14 percent to $27.35 in very heavy trading on the New York Stock Exchange (news - web sites), above Comcast's current offer. Comcast's Class A shares tumbled $2.20, or 6.5 percent, to $31.73 on the Nasdaq Stock Market.

Philadelphia-based Comcast merged with AT&T Broadband in November 2002, making it the nation's largest cable TV company with 21 million subscribers. The company noted that merger in its sales pitch Wednesday.

"Our management team has a proven track record of successful integration of our merger partners," Roberts said.

Comcast also has extensive holdings in media content providers, with majority stakes in Comcast-Spectacor, the owner of the Philadelphia Flyers and 76ers; Comcast SportsNet; E! Entertainment Television; the Style Network; Golf Channel; Outdoor Life Network; and G4.

Separately, Comcast reported Wednesday that it swung to a profit of $383 million, or 17 cents per share, for the quarter ending Dec. 31 thanks to continued strong demand for its digital cable and high-speed Internet services. Revenues jumped 58 percent to $4.74 billion.

Last year, Roy Disney, the last Disney family member active in the company that his father and uncle founded in the 1920s, and Gold had called on Eisner to resign, saying he was to blame for a tumbling stock price, embarrassing management missteps and a focus on short-term profits over the company's core mission.

But others credit Eisner with turning a sleepy theme park company and also-ran movie studio into a major media conglomerate.

1 hour, 23 minutes ago

 

[Peter Pirate]

Who exactly is wailing & gnashing their teeth for the reasons you stated yoho?

 

[crusader]

It is kinda fun though to watch the wailing and Nashing of teeth from those that were previously convinced that Emperor Eisner really really was wearing some nice cloths.

Now who might that be?

Your crazy if you think Comcast wouldn't milk the parks far worse than what you've seen.

 

[YoHo]

First, Peter, A number of people, whole boards. I suppose I could include you and our newly returned Duck, but you two aren't Wailing or Nashing.
Mainly, I just got a chuckle out of saying it.

As for Crusader, I never meant to imply that Comcast wouldn't be worse, only that there are a group of Disney fans that were blind to the fact that events have been leading to this for years.

 

[raidermatt]

None of us have any idea if they would milk them more or less.

The fact is, the type of "Disney as an independent company" we are talking about has not existed for years. (Don't worry too much about the name itself... too much value for Comcast, or anyone else, to dump it.)

Again, its just a question of who is running the show.

Yeah, it could get worse. But the bottom line is that something has to change. Disney is milking them because their other assets are underperforming. It got them by in the short term, but that can't go on forever, as has been said many times.

If a new owner can improve the performance of those other assets, the pressure to use the parks as a cash machine rather than as an investment would ease. Doesn't mean it would necessarily play out that way, but I have no confidence in it playing out that way with the current regime.

Then there's the possibility of the parks (and hopefully with it, animation) being sold to another buyer who definitely looks at them as investments for the long haul. Again, no guarantee, but then again, there's no such thing as a guarantee in these things.

The only thing we know for sure is that the current regime put Disney in this position, so of all the players involved (revealed or not), they should be at the bottom of the list of preferred "winners".

 

[JDH]

The One That Got Away: The Disney/Comcast Story

Jim Hill is really kicking himself this morning. Why for? Because -- for weeks now -- he's been circling the Disney/Comcast story, but never actually got around to writing the thing. The sad details follow ...

Okay. NOW this is all sort-of semi-starting to make sense.

Let me explain: For weeks now, people have been speculating about why the Walt Disney Company had chosen Philadelphia as the place to hold this year's annual shareholder meeting. I mean, given that the people in Philly don't exactly love the Mouse right about now (They're still mad that the Walt Disney Company abruptly abandoned plans to build a $167 million DisneyQuest at Eighth and Market back in April 2000. Leaving the "City of Brotherly Love" pretty much holding the bag for over $44 million in pre-construction preparatory costs for that project), it just didn't make much sense that Disney would opt to hold its meeting there. Thereby giving the "Boo Birds" an opportunity to cat-call at Mickey.

But -- still -- given that the Walt Disney Company has always used the city where its annual meeting is being held to re-enforce that year's goal or message from the corporation (EX: The 1999 annual meeting -- which was held in Seattle, WA, the town that is considered by many to be the veritable epicenter of the Internet entrepreneur universe -- was seen as the perfect spot to launch Disney's Go.com internet effort. And the 2002 annual meeting was held in Hartford, CT. Which is just down the street from Bristol, CT. Which -- not-so-co-incidentally -- is where ESPN's world headquarters is located. Which gave the Mouse an opportunity to brag about how well its sports network was doing during a year when Mickey had precious little else to boast about). Which is why Philadelphia seemed like an odd choice to me...

Except when you factor in that Comcast's Corporate Headquarters are located in Philadelphia, PA.

Now -- like a lot of you -- I'd been hearing the Disney/Comcast rumors for weeks now.

I'd seen the press speculation, like that Philadephia Inquirer piece back on December 8th, 2003. But everyone that I spoke to within the investment community always dismissed the Comcast/Disney talk as idle internet chatter. Which is why I eventually opted (now to my infinite chagrin) not to pursue this story.

Because -- I have to tell you, gang -- that the fact that Disney had decided to hold its annual shareholders meeting in Philadelphia just nagged at me. I just knew that there just HAD TO be some sort of significant reason why the Mouse would chosen this city -- out of all the other places in the U.S. -- as the perfect spot to hold its annual meeting.

And then there was the Steve Burke factor to consider. For those of you who don't already know: Comcast Cable's president, Steve Burke, has large scale ties to the Walt Disney Company. During his 12 year tenure at the Mouse House, Steve helped found the Disney Store, then shepherded that retail chain through its first few years of explosive growth. Following that coup, Burke moved over to Euro Disney S.A. in late 1992. Where -- as President and Chief Operating Officer of that troubled resort -- he helped put together the complex financial restructuring deal that allowed Disneyland Paris to keep its doors open.

After that extraordinary effort, Burke continued to rocket up Disney's corporate food chain by becoming president of ABC Broadcasting. Where he was in command of the 10 ABC-owned television stations; the ABC Radio Group as well as Buena Vista Television, the company's domestic syndication arm.

Yeah, Burke had been one of Michael Eisner's most trusted lieutenants. One of the men whose name had been on a very short list as a possible successor for Eisner.

But then -- in June of 1998 -- Steve suddenly opted to bail out of the Mouse House. Some say that the opportunity to run Comcast Cable was just too tempting for Burke. Still others suggest that Steve had grown weary of dealing with Eisner on a daily basis, of constantly having his decisions over at ABC second-guessed or micro-managed by Michael. I've also heard that Steve was frustrated by the fact that Eisner was continually refusing to name an heir for his Magic Kingdom (I.E. designate a successor).

So Burke bailed out of the Walt Disney Company. Though I'm told that -- thanks to his extensive network of contacts and old colleagues who still worked for the Mouse -- Steve was able to keep pretty close tabs on what had been going on. How the corporation had seemed to have to lost its way, creatively. How the value of the Disney brand was being damaged by continual corner cutting and short term thinking.

Which brings us back to Philly, folks. Now please don't be taken in by these news reports which suggest that this proposed Comcast/Disney acquisition deal was a complete surprise to Michael Eisner. I mean, if the Walt Disney Company hadn't already had something in the works with Comcast Cable, then why did the Mouse make arrangements WEEKS AGO to hold its annual shareholders meeting in Philadelphia? The city where -- not-so-co-incidentally -- Comcast Cable has its world headquarters.

Is this really a hostile takeover (as the press accounts this morning are suggesting)? Or is this some sort of deal that Michael Eisner was brokering -- which the hope that it would allow Disney's embattled CEO to go out on top, having just engineered one of the largest deals ($54.1 or $66 billion, depending on whether you factor in Disney's debt load that Comcast is looking to assume) -- that simply got away from him?

Either way, Michael Eisner's in a pretty interesting spot this morning. And I'm sure that he'll have some very challenging questions to answer this afternoon when he speaks with investment analysts at Disney's quarterly earnings conference call.

And JimHillMedia.com will be trying to stay on top of this breaking news story. Let's just hope that I don't bobble this one the way I did that Disney/Comcast story back in December.

(Damn it! I KNEW I should have written that article back then ... GRRRRR ...)


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by Jim Hill
February 11, 2004


Interesting information on Steve Burke. Of course his speculation isn't anymore right or wrong than ours.

 

[andromedaslove]

From CNN.com:
Gold said it was "much too early" to comment on whether he and Roy Disney favored a Comcast deal. But on a conference call, he called it a "serious offer," adding he hopes the Disney board "would begin to handle this with the best interest of shareholders, and not the best interest of Michael Eisner, in mind."

"Although Gold and Disney would not comment about the specifics of Comcast's offer, Gold gave a glowing endorsement of Stephen Burke, the Comcast Cable president who worked for Disney for 12 years before joining Comcast.

"Stephen Burke is a very able executive. When he left, the company began to fall on bad times," Gold said. "Steve is the kind of guy that Disney ought to be populating all its divisions with."

 

[MELSMICE]

If this were to happen, I just don't see how a cable company would want anything to do with theme parks. There main concern IMO would be communications. Thus, selling off the theme parks or letting them go by the wayside.

I can't see how the "Disney magic" can be bought or sold. Things may be the same in the beginning if there is a sale (takeover), however, there is always change on the horizon when a new "power" comes in. I certainly hope it would be for the better, but I don't remain optimistic about it.

As the saying goes "The 'show' must go on", but at what expense?

 

[vernon]

It seems to me that Stephen Burke is the key here. He seems the obvious man in Comcast to run the "Disney divisions" and his track record looks pretty good. I thought that originally the Disney stores did a pretty good job, they provided good quality imaginative merchandise at granted a highish cost. It was only after he left that the DS started going downmarket and eventually down the tubes. Disneyland Paris's location was Eisner's choice ( and a bad one), but having visited the park I think it has been reasonably well done. Burke does seem to have done a good job in almost every area of Disney he worked in and it doesn't appear he had a name for being a "cost cutter".

It could well be the case that his knowledge of the company and links within it have led him to believe the Themeparks and animation divisions have been "raped enough" they could make the company a lot more money if there is investment in them. The noises Comcast are making does seem that they at least understand what people want to hear. IMHO Eisner had become a "one trick pony" his mantra was raise profit by cutting costs. If Comcast realise that Eisner's tactics were what got the company into the position where Comcast could mount a challange for it, it would be a pretty odd choice to continue in that direction.

Disney's biggest asset is it's name. That name is a byword for service and quality, it commands customer loyalty. If Comcast ran down that name and what it stands for they would be reducing the value of their purchase. If this is done properly it could be the injection of funds that we've all been begging for. Let's be honest that ain't going to happen under Eisner.

I have no objection to Comcast making more money from the Themepark divisions if they invest in upgrading them first.

 

[wtg2000]

I just don't see how a cable company would want anything to do with theme parks.

They own a hockey and a basketball team.

Thus, selling off the theme parks or letting them go by the wayside.

The parks generate per tax income of 1.5 billion dollars per year. Hardly chicken feed. Plus, if Comcast wants the studios to prosper then the parks are an outlet for that creativity. They give the Disney name a face, and give outlets for cross-promoting products (ie: selling film merchandise). If kids go on the Toy Story ride they're going to want to buy the next Toy Story movie or watch it on video-on-demand. The parks are a massive outlet. Any company that ignored their potential would be grossly mismanaged I believe.

 

[mitros]

Brian Roberts Comcast CEO said in a conference call with investors and analysts that since Eisner rejected the offer,he said that the ball is now in Disney's court. Disney board members said they received Comcasts offer and would "carefully evaluate it" In the meantime,shareholders need "not take any action" at this time. Roberts says he would like to make the deal as friendly and amicable as possible and as fast as possible. He also said that he was ready to abandon the merger if need be. "We've walked away from big things before. Life goes on"


This is the first time I have heard him say that he may abandon the take over. I thought he was going to push it to fruition.