Comcast makes offer to merge with Disney

[mitros]

I don't claim to understand these hostile takeover bids, but if Comcast claims that since Eisner would not talk to them about a merger, that they were going to make an "offer" to him{Eisner} and the board. Since Eisner has so many friends on the board, wouldn't he just say to them, "Let's not accept the offer" and that would be it? Shows you how much I know about BIG business dealings.

 

[normr]

Here is the letter from the President/CEO

Comcast's letter to Disney



Brian Roberts lays out Comcast's case for a takeover of Disney to a resistant Michael Eisner.
February 11, 2004: 7:44 AM EST






Below is the letter sent by Brian L. Roberts, Comcast's president and chief executive officer, to Michael Eisner, Disney's chief executive officer:



February 11, 2004


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Mr. Michael D. Eisner
The Walt Disney Company
500 South Buena Vista Street
Burbank, California 91521




Dear Michael:



I am writing following our conversation earlier this week in which I proposed that we enter into discussions to merge Disney and Comcast to create a premier entertainment and communications company. It is unfortunate that you are not willing to do so. Given this, the only way for us to proceed is to make a public proposal directly to you and your Board.



We have a wonderful opportunity to create a company that combines distribution and content in a way that is far stronger and more valuable than either Disney or Comcast can be standing alone. To this end, we are proposing a tax-free stock for stock merger in which Comcast would issue 0.78 of a share of its Class A voting common stock for each share of Disney. This represents a premium of over $5 billion for your shareholders, based on yesterday's closing prices. Under our proposal, your shareholders would own approximately 42% of the combined company.



The combined company would be uniquely positioned to take advantage of an extraordinary collection of assets. Together, we would unite the country's premier cable provider with Disney's leading filmed entertainment, media networks and theme park properties. In addition to serving over 21 million cable subscribers, Comcast is also the country's largest high speed internet service provider with over 5 million subscribers. As you have expressed on several occasions, one of Disney's top priorities involves the aggressive pursuit of technological innovation that enhances how Disney's content is created and delivered. We believe this combination helps accelerate the realization of that goal-whether through existing distribution channels and technologies such as video-on-demand and broadband video streaming or through emerging technologies still in development-to the benefit of all our shareholders, customers and employees.



We believe that improvements in operating performance, business creation opportunities and other combination benefits will generate enormous value for the shareholders of both companies. Together, as an integrated distribution and content company, we will be best positioned to meet our respective competitive challenges. We have a stable and respected management team with a great track record for creating shareholder value. In fact, our shares have consistently outperformed leading stock indices by significant margins, including the S&P 500 by a margin of more than 2 to 1 since Comcast went public in 1972.



The Comcast management team greatly appreciates and is highly respectful of the Disney heritage. We know that there are many talented executives at Disney who we envision would also play a key role in managing the combined company. We also would welcome directors from your Board joining our Board.



We have analyzed the issues associated with regulatory approval and are confident that all necessary approvals can be obtained in a timely fashion. Given the landscape that has evolved in our industry over the past few years, the creation of integrated content and distribution companies is essential to increasing the level of competition. The FCC's existing program access and program carriage rules ensure that the combined company will continue to make all of its satellite-delivered national and regional cable networks available on a non-exclusive, non-discriminatory basis and that there will be no discrimination against unaffiliated programming services, all consistent with the undertakings made by News Corp. in its recent acquisition of DirecTV.



We hope that the Disney Board will pursue the opportunity that this proposed combination presents to your shareholders.



Very truly yours,



Brian L. Roberts
President and Chief Executive Officer _

 

[WDWHound]

Originally posted by mitros
I don't claim to understand these hostile takeover bids, but if Comcast claims that since Eisner would not talk to them about a merger, that they were going to make an "offer" to him{Eisner} and the board. Since Eisner has so many friends on the board, wouldn't he just say to them, "Let's not accept the offer" and that would be it? Shows you how much I know about BIG business dealings.

The board can be overuled by the stockholders. The stock holders can force a vote on the matter and, if the majority of the majority of the shares vote for it, its passed. Theres nothing the board can do to prevent that, which is why its called a hostile takeover.

 

[WDWHound]

Note there is no mention of the parks in Comcast's letter.

 

[tfc3rid]

In the combines assets section of the terms sheet on Comcasts site it mentions:

Amusement Park Assets

I am glad this how Comcast views the Theme Parks.... Not good...

 

[wtg2000]

If Comcast does win, I can picture the new Fast Pass system. You get a ticket for Tuesday between 9 and noon or Wednesday between 1 and 5. Then you wait around and hope that the ride operator shows up.

 

[Peter Pirate]

Right hound, it's obvious that the Parks are not (on the surface, at least) what this is all about.

Interesting that, according to Mr. Roberts letter, Eisner turned down negotiations, this is a bit different than your take was it not Mr. voice???

 

[Luv2Roam]

Excuse me if this link has been posted already:
http://money.cnn.com/2004/02/11/commentary/bidask/bidask/
The Mouse without Mike?

 

[goofyguy1958]

I am going to try and put a little positive spin on all this. If you read the actual letter, from Comcast to Mr. Eisner, you will see that there are actually plans to include some of the "many talented executives at Disney who we envision would also play a key role in managing the combined company." Comcast's history, at least with the Philadelphia Flyers and 76ers, is to let the individual entities run their business. Comcast has contributed to both teams in $$ but has remained in the background. To me, that is exactly what may be needed to turn things around at Disney -- as long as they can find a group of imaginative, future-thinking, people-focused executives (ie. ROY et al)

 

[barbeml]

Comcast is a wretched company. Their business practices border on the criminal. They show blatant contempt for their customers, from the executive suite to the customer service line. Their services are unreliable. Their employees are rude and cluelesss.

I can't see any good in this, either.

 

[tfc3rid]

Positive is that Ei$ner is gone if this hgappens...

Nagatives are that our stock prices will collapse if this is pulled off the table. Othe companies will get in the mix and this will be disastrous.

The only good thing would be for Comcast to pull the offer off the table, Eisner would be weakened with the falling stock prices and Roy and Stan's moves would pay off...

 

[Peter Pirate]

Remember Roy's age and the fact that he has said over and over again that HE doesn't want the job. Of course Comcast is going to put a positive spin on it as far as folks job prospects go, but seriously can you compare the quality necessary to run a pro sports team to running the Disney brand?

Heres a magical thought, maybe Allan Iverson could be the new Disney spokesman.

 

[wtg2000]

I'm surprised they waited until Disney was $20+ per share. Last year it was in the $14-15 range.

The article calls ESPN the crowned jewel of Disney and not the Disney name or characters. Comcast obviously want the communications and delivery aspect of Disney and maybe don't care about the creative or production aspect.

 

[raidermatt]

Amusement Park Assets

I am glad this how Comcast views the Theme Parks.... Not good...

Its how Disney views them, so what's the difference?


Look, I'm not saying this is a "good" thing. I think its good in the sense that things are coming to a head, and one way or the other there will be some resolution.

But more than anything I simply see it as predictable. Just as the frenzy in 1984 was predictable. Disney has been underperforming and has a heck of a lot of valuable assets. The economy had most mergers on the back burner for awhile, but that curtain is lifting.

That's not to say I claim to know who was going to bid for Disney, or who will going forward. Only that when you mismanage what you have, as Eisner and co have done, there will eventually be consequences.

Many didn't want to believe that, and unfortunately, its impossible to prove it to them until it happens.


Now that said, yes, there is a chance this could still work out for the best, from a "fan" pov.

 

[raidermatt]

Remember Roy's age and the fact that he has said over and over again that HE doesn't want the job.

Agreed.

But there is the chance that Roy and Stan could get some of the spun off 'assets', with someone else as the CEO.

 

[raidermatt]

I'm surprised they waited until Disney was $20+ per share. Last year it was in the $14-15 range.

Lots of things go into the timing... The environment for M&A's was not very friendly a year ago. Disney was not under fire from Roy/Stan, which increases their vulnerability.

I'm sure there are also some other behind the scenes factors as well.

 

[goofyguy1958]

Hey Peter Pirate, how about Pat Croce, the ex-president of the 76ers, who just so happened to turn a dieing franchise around with his fan-focused approach. He made the 76ers a brand unto themselves.

 

[Peter Pirate]

But there is a chance that Roy and Stan cound get some of the supun off 'assets', with someone else as CEO.

Agreed.

But boy, roy and Stan would have had to have been REAL busy over the past few weeks, wouldn't they?

What about my 'out there' possibility that Roy & Stan rescue Eisner in return for what they're looking for? Too wild even for Hollywood?

 

[adambreakey]

I would say that might be a bit too wild, even for Hollywood.

adamb

 

[akalucky1]

I can't believe this is happening. I "fired" Comcast three years...their customer service was horrible and one big hassle.

We needed a repair and were without cable for 2 weeks, then the repair people never showed during the service window time and we went back to work. They never called saying they were going to be late. Then they showed up 4 hours late and left a note. We called when we got home from work and were told we would have to wait another two weeks before they could come to do the repair. This is when I told them "you're fired. get your crap out of my house and don't ever call again." My husband was laughing. I got Directv the next day and installed two days later. Best thing that ever happened.

I don't want to deal with Comcast again. I hope this deal doesn't go through.