Comcast makes offer to merge with Disney

[roymccoy]

C'mon guys...I'm reading a couple of things here that ain't gonna happen.

1. Comcast will not keep the theme parks. No chance. They aren't buying Disney for the theme parks. They will sell them off. They have probably already approached a couple of companies to buy them. In an interview with the CEO of Comcast this morning, when asked what Comcast would do with the theme parks he said that the theme parks are only 15% of the Disney pie and that they're not merging with Disney for the theme parks.

2. Roy and Stan ain't gonna be buying the theme parks. I would estimate that if Comcast DID get this thing to go through, the theme parks would probably go for between 10-15 Billion. (This is based on the $66-90 billion for Disney and taking into account that the theme parks are 15% of the business plus a little to boot.)
Roy and Stan ain't comin' up with $10-15 billion.

This is the end of Disney as we know it. Actually, it probably won't be Comcast that even does the deal. General Electric or Microsoft will probably sweeten the pot a little and make their own offers. Disney is going to go for around $100 billion before this is all over.

Oh well, zip-a-dee-doo-dah.


Roy

 

[hirschberger]

Disney as we know it has been over. If you only go back a couple of years you see the new disney which only does things to enhance the bottom line. When I go to the parks I see a money hungry company that has cheapened the family values that disney was founded on. What a shame

 

[wtg2000]

Roy,

After reading your post I read a YAHOO story titled, "Comast Likely to keep Disney Parks." We'll see who's right.

Unfortunately, the story is bad news with quotes like:

"Comcast said it plans to drive attendance at the parks through advertising and cross-promotion at attractions, hotels and concessions." - again, marketing not quality product.

and this depressing quote:

"The theme parks' value is not in the rides. It's the Disney brand. Kids go there to see the characters they know from the movies," said Barry Ritholtz, chief market strategist at Maxim Group, a global money management firm whose clients own Comcast and Disney shares.

The article says that a sale of the parks would be without the Disney characters and that a buyer would have to license them. That would be awful - to see someone own the parks without owning the characters. And who would own the rights to the "Disney" name?

YAHOO

 

[GrimGhost]

wtg2000 wrote:

The article says that a sale of the parks would be without the Disney characters and that a buyer would have to license them. That would be awful - to see someone own the parks without owning the characters. And who would own the rights to the "Disney" name?

If you read the whole quote from the analyst, he is suggesting it would be unlikely that Comcast would be ABLE to find a buyer--given THEY(comcast) would not be willing to give up the licensing, and ultimately the parks could not work without Mickey,et al.

Atleast that is how I interpreted it.

 

[YoHo]

This assumes that the Disney Name has value to Comcast.

It depends on how much of this is a game.

 

[Peter Pirate]

I agree yoho that 'gamesmanship' is very much in play...It'd be great to know just who's playing!

 

[caribbeanme]

Comcast seen bringing few changes to Magic Kingdom

http://www.forbes.com/business/newswire/2004/02/11/rtr1257565.html

key quotes:
"But Burke said Comcast wants to rebuild Disney's storied animation division and sees opportunities in boosting the performance at the "Magic Kingdom" theme parks.

"One of the first things we'd like to do ... is do everything we can to empower the existing animation group," Burke said.

"The second area we think there is room for revitalization and improvement are the Disney theme parks." He talked about about more aggressively promoting the parks and restoring the "creative spark" in the Magic Kingdom playgrounds."

article goes on to discuss analyst's viewpoint, echoed elsewhere, that comcast's goal would be to keep the integrity of the brand, since most of disney's value is in precisely that...

we'll see...

 

[Maistre Gracey]

I am no expert, but after reading most quotes, and the Comcast website, at least to me it sounds as though Roy and Stan are sending their message via Comcast spokesperson.

Am I imagining this, or perhaps just wishfull thinking???...

MG

 

[roymccoy]

The CEO of Comcast was on CNBC this morning and was asked directly "Does Comcast want to be in the theme park and hotel business?" and both times he deflected the question by saying that "the theme parks are only about 15% of Disney's business..." and that they aren't going after Disney for the theme parks and hotels.
You could just see it in his eyes that they aren't going to go out of their way to keep the parks and hotels.

My wife reminded me that this is kind of like "Pretty Woman". Rich corporate raider threatens to take control of a family business and carve it up for financial gain only to be "enlightened" by Julia Roberts.

Let's hope Brian Roberts is staying with a "down to earth" prostitute tonight. ;-)

Roy

 

[Maistre Gracey]

Originally posted by roymccoy
The CEO of Comcast was on CNBC this morning and was asked directly "Does Comcast want to be in the theme park and hotel business?" and both times he deflected the question by saying that "the theme parks are only about 15% of Disney's business..." and that they aren't going after Disney for the theme parks and hotels.
You could just see it in his eyes that they aren't going to go out of their way to keep the parks and hotels.

My wife reminded me that this is kind of like "Pretty Woman". Rich corporate raider threatens to take control of a family business and carve it up for financial gain only to be "enlightened" by Julia Roberts.

Let's hope Brian Roberts is staying with a "down to earth" prostitute tonight. ;-)

Roy

You can call me naive, but again this could fit in with the Roy/Stan plan....

MG

 

[roymccoy]

My only problem with the "Roy and Stan" scenario is this...

1. I don't think Roy and Stan could get the billions together that it would take to buy the parks and hotels from Comcast. (or whoever)

2. Roy and Stan have sold a lot of their Disney shares recently and aren't in as powerful of a position as last time. (1984)

3. They aren't on the Disney board anymore.

4. They are in their 70's. (I know this one won't set well with everyone but it is a fact.)


That being said, stranger things have happened. I even heard a rumor this morning on one of the financial programs that an analyst had heard that a German company has already said that they would be interested in the parks and hotels if Comcast wanted to break that off. Hey, a German company bought The Muppets.

Roy

 

[Planogirl]

Roy and Stan could very well be working with unnamed backers. I would bet that MANY parties are interested in this situation.

 

[wtg2000]

This assumes that the Disney Name has value to Comcast.

I would think the Disney name is HUGE to Comcast. They want Disney's film library to sell to video-on-demand and the like. They need the rights to Disney characters, the right to market the films, both past and future, as Disney because they know the Disney name has cache.

"Oh, it's got cachet baby. It's got cachet up the yin yang."
-George K.

 

[kozmo]

To me this is sad sad news!!

 

[IStoleMyKidsPins]

All this talk of Comcast getting rid of the Theme Parks just baffles me. I've read the quotes about the parks only making up 15% of Disney profits. But seriously, it's STILL a profit. It's not like the parks are losing money. 15% of what the Disney Corp takes in each year is still a huge amount of money. Getting rid of the parks would be like us saying, "I bought these new boots. The shoelaces are actually only 15% of the boots and while they're not totally necessary to the functioning of the boots, they still help out the overall success of the boots. But I'll just sell them at my yard sale for a few cents." Or, how about if you go to the grocery store & see an item you want. Same exact item, same brand. The only difference is that one is 15% bigger. Do you get the smaller one? No, you get the one that gives you 15% more. Comcast is a business. Why would they just throw away a cash cow like the theme parks just because they are not the biggest cash cow on the Comcast farm?

 

[wtg2000]

This is a blurb my brother emailed me but I don't know the source:

Time Warner, the world's biggest media company, was scheduled to hold a conference call with investment bankers yesterday afternoon to discuss the possibility of making a run at Disney, say sources familiar with the situation.

Meanwhile, Pixar Animation Studios' Steve Jobs was understood to be in active discussions with parties, including cable operators, about putting together a team to emerge as a potential white knight for the Mouse House.

 

[Peter Pirate]

Steve Jobs as the modern day Bass Brothers? I wondered about this. If this does have any creedence then we can be assured that Roy has been very, very active over the past month or so.

 

[tfc3rid]

The only way this could be an ounce of good is if Steve Jobs gets into this. That blurb is from the New York Post.

Comcast has suitors out there for the Theme Parks already, as well as vacation club, cruise line, etc...

The end is here.

 

[caribbeanme]

i read reobert's (comcast ceo) comments about the 15% theme park holdings differently. since the announcement, the business press has been skeptical about comcast's transformative ability. until nov. 2002, this company was one of a few key players in the cable industry. then, they made a winning play for at&t's cable holdings, which, when coupled with adelphia cable's implosion, created a void in the industry which comcast was able to fill and dominate. barely fresh from that change, they are now trying to out-merge the merger kings, time warner, and become a multi-industry company.

the naysayers in the press are wondering if a one-trick pony can start learning new tricks, particularly those which are not necessarily synergistic for a cable company. for example, in the new york times, an analyst says:

"Yet Richard Greenfield, who follows Comcast and Disney for Fulcrum Global Partners, a research firm, was less certain that Comcast had the executive talent to fix Disney. "While Comcast has done a great job managing cable systems and networks, its ability in core Disney assets such theme parks and animation are unknown,'' Mr. Greenfield said." [http://www.nytimes.com/2004/02/12/business/media/12cable.html]


in other words, perhaps comcast, as a cable company, could feasibly understand the tv entertainment industry. but could they understand left of center businesses like parks and lodging? when comcast's ceo answers that the parks are only 15% of the holdings, he is basically saying-- parks are not the make or break of this business. the bulk of it is something i know, something this company can deal with. he is trying to tell the naysayers that this seemingly weird merger won't be weird at all. most institutional investors are looking for these type of "overall merger health" messages. read this way, robert's messages-- the parks are only 15% but we want to make them thrive-- are not at all inconsistent with each other.

furthermore, looking at the glass as half full, which, as a person who's intimate with the merger process, i tend not to do, 15% is a nice little number. it's small enough to suggest that you don't live or die by that part of the business, but not large enough to necessarily suggest that you need to cut it off like a gangrenous appendage. particularly when 1. one of your top executives was involved with euro disney, 2. when you can squeeze some synergies off the parks, 3. when you can increase your goodwill by keeping them, 4. when the parks are going through an upswing (as reported in the first quarter), and 5. when spinning them off might be a copyright headache (you have to sell the parks with a license to use disney trademarks, etc, in perpetuity, bc without them their value is incredibly diminished).

this from the wall street journal, today:

"In the foreground of the Comcast move has been its president, Stephen Burke -- whose father was a top Disney executive, and who himself worked as a senior executive at Disney for 12 years and was considered by some a possible heir to Mr. Eisner. In presentations yesterday, Mr. Burke criticized the performance of
a number of Disney divisions and predicted that Comcast would be able to increase the company's cash flow by $800 million to $1.3 billion within three years.

For example, Mr. Burke noted that Disney's ABC Network 'is a weak No. 4' compared with the other major broadcast networks. He also criticized Disney's animation division and said if Comcast succeeds in its takeover, it would once again become 'absolutely central to the heart' of Disney, he said. "[Mouse Trap: Disney, Struggling to Regain Glory, Gets $48.7 Billion Bid From Comcast
by Bruce Orwall and Peter Grant, A1]


that is not to say that comcast may be looking to keep the parks at all, or indefinitely. but i don't think the 15% comment qualifies as the smoking gun which shows the company's true intentions.

 

[tfc3rid]

I thought that the parks were 25% of Disney's revenue?