ME "knew" about Comcasts bid before the event.

[vernon]

Here's a link to the story in the Orlando Sentinel.

http://www.orlandosentinel.com/busi...feb24,1,2448005.story?coll=orl-home-headlines

Far from being blindsided by Comcast Corp.'s bid to buy the Walt Disney Co., Chairman Michael Eisner said Monday that he had been warned of the cable giant's intentions -- and was well prepared by the time the call came in.Eisner said he'd heard rumblings about Comcast's interest in Disney, told the company's board about them and then crafted a written response with the help of three outside advisers well before Comcast chief executive Brian Roberts phoned him Feb. 9 to discuss a potential deal.

"There had been some direct, vague conversations that led us to believe that this phone call could happen," Eisner said during a conference call with investors. "I happened to be sitting at my desk when Mr. Roberts called." The Disney chief explained that he punched up the prepared response on his computer screen -- and delivered it to Roberts "word for word."

Eisner's recollection drew a sharp rebuke Monday.
"We find it extremely troubling that Disney's board would have made up its mind to say no to our proposal before they even heard it" and knew what it was worth, according to a statement released by Comcast. "How can that possibly be in the best interests of Disney's shareholders?"

Others raised the same question.

"You at least owe your shareholders hearing the other side out," said Charles Elson, director of the Weinberg Center for Corporate Governance at the University of Delaware. "To make a decision based on a rumor doesn't seem as though it gives the kind of thoughtful consideration shareholders expect."

Sources close to Roberts said the Feb. 9 call began with the Comcast CEO asking Eisner whether the Disney executive could envision "any scenario" in which a deal could be reached. Eisner dismissed the idea, sources said. The entire call lasted about 30 seconds.

Comcast made a formal unsolicited offer for Disney Feb. 11. On Feb. 16, the Disney board unanimously rejected the bid, now valued at $61 billion.

George Mitchell, Disney's presiding director, stressed Monday that Eisner had acted with the backing of the board when he rebuffed Roberts on the phone.

"Every member of the board was informed and aware of the fact that a phone call might be made, so that the call was not unexpected, and all members were aware of what, I guess, I will call 'the interest,' " Mitchell said.

Eisner and Mitchell spoke during a conference call organized by Glass Lewis & Co., an independent research and proxy advisory firm. It was convened 10 days before Disney's much-anticipated shareholders meeting in Philadelphia, one that has turned into a referendum on Eisner's leadership.

I find it interesting that Eisner had a prepared reply, based on rumours of what Comcasts offer "might be", dismissing the offer out of hand. As with a few comments on the story I'm suprised that the offer wasn't given what I would view as "due consideration" at the very least. ME seems to be trying to make "confident noises" to show he has/had the situation under control, but IMHO this release doesn't show his management skills in a good light

 

[Chuck S]

Comcast is notorious for poor customer service. The board believed that a Comcast takeover was not in the best interest of the company, or its stockholders, and had a reply drafted in case the rumor of a bid was true. The bid was, as the board was lead to believe prior to the call, undervalued and a stock trade NOT a cash offer. What's the problem?

 

[vernon]

I would presume "normal business practice" would be to at least appear that you give any approach it's due consideration, if for no other reason than you'd like any "source" you have remain "in situ" and be in a position to give further information. By letting a hostile company know their information chain leaks you're reducing your chance of further information in the future. As has been mentioned by the corporate investment share holders the board has a fiducary responsibility to give all approaches due consideration, 30 seconds isn't due consideraton, IMHO it's unprofessional on a number of levels.

This was a personal (and emotional) response to what should be a company decision, you're welcome to dislike Comcast either in this particular situation or overall but that shouldn't cloud one's judgement as to what is and what is not correct proceedure.

 

[Chuck S]

As has been mentioned by the corporate investment share holders the board has a fiducary responsibility to give all approaches due consideration, 30 seconds isn't due consideraton,

But the board DID give it consideration prior to the call coming in. The call was exactly what they had expected, and the offer was to what they had prepared the response.

What you're saying is Eisner did not properly consider the options, if the board had time to draft a response...they considered the options. Now your saying Eisner should have said "OK, thanks for the offer, we'll get back to you in a few days." Imagine what Roy's publicity machine would have done with that..."Oh look,now Eisner is considering selling the company, better act fast and vote like I say".

A Catch-22 situation, huh?

 

[vernon]

A Catch-22 situation, huh?

No, Catch 22 refers to an impossible situation, in this case the board could easily say to the share holders "we have received an offer, we don't think it represents full value for the company but obviously we will give it our full attention, consider the shareholders best interests and report our findings to the share holders" No one can critisise that action, not even a need for an insanity plea LOL.

 

[manning]

I would presume "normal business practice" would be to at least appear that you give any approach it's due consideration, if for no other reason than you'd like any "source" you have remain "in situ" and be in a position to give further information.

And in negotiating, to get more time the proper response should have been "I will have to take this up with the board, I will get back to you".

But the board DID give it consideration prior to the call coming in. The call was exactly what they had expected, and the offer was to what they had prepared the response.

Even if they did consider it (assuming they knew what they were considering) the getting back to you response buys you more time to plan.

 

[raidermatt]

Some additional comments in an article from the NYTimes.


Questions on Overture Dog Disney
By LAURA M. HOLSON

Published: February 25, 2004


LOS ANGELES, Feb. 24 - Questions about who knew what, and when, continue to dog the Walt Disney Company, which disclosed on Monday that its board had been advised of an overture to enter merger talks with the Comcast Corporation ahead of a $54 billion bid.

Disney disclosed that its chief executive, Michael D. Eisner, had consulted directors before the Feb. 9 phone call he received from Comcast's chief executive, Brian L. Roberts, to enter merger discussions.

During that call, Mr. Eisner read from his computer screen a scripted rejection which, the company disclosed Monday, the board had approved. Two days later Comcast made a formal offer, which the board rejected as too low.

The new disclosure seemed to contradict an earlier impression that Mr. Eisner had rebuffed Mr. Roberts' request for merger talks without talking to the board.

Richard Greenfield, an analyst at Fulcrum Global Partners, wrote in a report, "We find it curious that the Disney board would instruct Mr. Eisner to read a canned rejection of Comcast's solicitation straight off his computer, without the board at least entertaining a discussion with Comcast."

Patrick McGurn, special counsel at Institutional Shareholder Services, added: "I think it would have been more powerful if they said something last week. Many people were left with the impression that Michael did this on his own."

Disney says it has had a board-approved strategy for two years to address situations related to mergers and acquisitions. "The board had a process in place in how to respond regarding any communication regarding an overture and what the proper procedure was for handling it," a spokeswoman, Zenia Mucha, said. "That procedure was followed."

But Mr. Roberts was not so sanguine in his response to Monday's news. "I purposefully raised the topic of a combination with Mr. Eisner in a way that I thought would lead to a discussion," he said in a statement. "How can it be in the best interest of Disney shareholders for him to not even talk to us?"

 

[Chuck S]

And in negotiating, to get more time the proper response should have been "I will have to take this up with the board, I will get back to you".

Why would they "need more time" when they ALREADY CONSIDERED the proposal PRIOR to the call?

By stalling for time, Roy (or other Eisner detractors), could EASILY have used that time to say "Look, the current board and Eisner WANT to sell the company."

They are being criticized for taking fast, preventative action. They would also have been criticized for stalling. THAT is a Catch-22 situation...they would have been criticized NO MATTER what course of action they would have taken.

 

[raidermatt]

Its always prudent to review a formal written proposal rather than act on a previously discussed verbal proposal.

Would it have been prudent to accept an offer without reviewing the written proposal?

 

[manning]

Why would they "need more time" when they ALREADY CONSIDERED the proposal PRIOR to the call?

In previous posts I have mentioned time is an ally.

When Comcast called, they chose the time they wanted to talk about a takeover. This tactic is designed to catch you off guard in hopes you are too busy to make the proper decision. The proper response is to tell them "we will call you back". This gives you time to collect your thoughts, consult with others and gives you more time to formulate your defense strategies. When you are on the defensive (as Eisner is) the more time you can buy the better off you are. Comcast wants to take that away from you. Time is against them.

 

[WDSearcher]

Originally posted by manning
When Comcast called, they chose the time they wanted to talk about a takeover. This tactic is designed to catch you off guard in hopes you are too busy to make the proper decision. The proper response is to tell them "we will call you back". This gives you time to collect your thoughts, consult with others and gives you more time to formulate your defense strategies. When you are on the defensive (as Eisner is) the more time you can buy the better off you are. Comcast wants to take that away from you. Time is against them.

But the thing is, Comcast didn't catch Disney off guard. There was talk, apparently, that Comcast was going to make a bid, so ME and the board discussed -- as any good board would do -- what to do if it happened. If you hear on the street that so-and-so is thinking about buying your business, you don't wait until the guy shows up in your office to begin thinking about it. You start talking about it when you first hear about it. (That tactic shouldn't be unfamiliar to people posting on a "Rumors" board. A breath of a rumor shows up here and people have it analyzed six ways to Sunday before it's even confirmed.)

None of us were in the board room, so we can't say what was or wasn't said, but it was likely a discussion of pros and cons, with a conclusion along the lines of "If they offer $X, we'll take a look; if they don't offer at least $X, then it's an automatic no." Which means that when Comcast did call, it was Comcast that was caught off guard by the quick response. Disney didn't NEED more time. They'd already discussed it. So why waste everyone's time by pretending to talk about a bid you already know you're going to refuse?

When the (hostile) written offer came, the board took time to look it over and still said no.

IMO, it was Disney that had the upper hand through this. Comcast was surprised by the quick rebuff, and watched their stock go down and Disney's go up as they announced their hostile take-over bid. People from Wall Street analysts to stockholders to Disney fans went on the record saying that a merger with Comcast would be a bad idea. Analysts said Comcast had made far too low of an offer. Disney lovers posted all over the place about how horrible it would be if Disney were taken over. Roy and Stanley actually agreed with Michael that the offer was too low. And Comcast has apparently backed off.

So ... Disney handled this badly again, how?

 

[manning]

WDseacher -- You ask if Disney (Eisner) handled this badly and how?

You bet they did.

If you reread my post you may understand. Negotiating isn't black and white.

One of the things Disney has to do is play for time, because Comcast will make another offer and it will be a serious one with time limits (deadline). I say time limits as plural because depending how the acceptance of the offer is playing out, an extention may be offered. The time limit is the trigger to get the deal done and is not necessarily cast in stone.

Disney is on the defensive and needs all the time it can get to try to fend off the takeover.

 

[freediverdude]

Disney handled it badly by already making their decision before the phone call, based on rumors instead of fact. And it doesn't sound like Comcast even talked numbers in a 30 second phone call- Comcast just said something like "Are you interested in talking about a merger?", and Eisner read from the script that essentially said "No, we're not", without even giving Comcast the chance to tell Disney what their offer was. So there was not even the scenario of an "automatic no" based on the size of the offer, Disney just said "We're not listening to ANY offer." And that's why Comcast then came out with a publicly advertised offer. Good grief, at least hear what the offer is....

 

[renknt]

WDseacher I think that having a response ready based on the rumor that someone might make an offer is doing the shareholders a grave disservice. It removes any thought of giving the actual offer any possible consideration. Where is the harm in waiting a day or two before telling them no.

When Comcast went public with the offer Eisner then said the Board will give it careful consideration. If their first response was correct and thought out why would the Board have to give any more consideration?

Because this refusal was more of a knee jerk reaction than a well thought out response.

 

[Chuck S]

Sources close to Roberts said ....The entire call lasted about 30 seconds.

Oh good, an anonymous source "close to Roberts"...who certainly would have no reason to exaggerate the conversation to make Comcast look good, and Eisner look bad. (Hmmm...do I smell Roy?)

The fact is, no one on these boards heard the conversation that took place on the phone...we don't know with any certainty how long it lasted. We don't know what details were discussed. We don't even know if the anonymous source actually heard the phone call.

My guess would be the call was probably short but 30 seconds, I doubt it. Probably Roberts was indeed given the opportunity to state the basics of the offer, prior to a rejection. The formal written proposal WAS voted on and rejected unanimously by the board.

 

[Razor Roman]

Why should the board entertain any take over offers?

Perhaps it is the position of the board that due to the unique nature of the Disney brand and business, that it is best if Disney is run by Disney and only Disney.

 

[WDSearcher]

Originally posted by freediverdude
Disney handled it badly by already making their decision before the phone call, based on rumors instead of fact. And it doesn't sound like Comcast even talked numbers in a 30 second phone call- Comcast just said something like "Are you interested in talking about a merger?", and Eisner read from the script that essentially said "No, we're not", without even giving Comcast the chance to tell Disney what their offer was. So there was not even the scenario of an "automatic no" based on the size of the offer, Disney just said "We're not listening to ANY offer." And that's why Comcast then came out with a publicly advertised offer. Good grief, at least hear what the offer is....

But what's wrong with not listening to any offer? If the point is to keep Disney an independent company, then no offer is good enough. And for all the people here who keep saying that ME will do anything to get his greedy little hands on more money, you would think folks would be pleasantly surprised that he didn't grab the cash and walk away. My dad owned his own business, and wanted to keep it his own. He had several offers of mergers or buy-outs, but he knew from the start that it wasn't about money for him. He wanted to keep his business his own. So anyone who asked got an automatic no. It didn't matter what the offer was -- he wanted to maintain the business as it was. And people would say to him, "Joe ... at least listen to the offer ... " and he would reply, "Why? I already know I'm not going to take it, so why waste their time, give them false hope that I may be interested, and get everyone in a tizzy when I know I'm going to say no anyway?"

 

[WDSearcher]

Originally posted by Razor Roman
Why should the board entertain any take over offers?

Perhaps it is the position of the board that due to the unique nature of the Disney brand and business, that it is best if Disney is run by Disney and only Disney.

THANK you! I meant to say that ....

 

[raidermatt]

If that were their stated position, I would be ok with that. However, they have stated they are open to considering offers that reflect the value of the company, or some such wording.

As such, again, it would be wise to review any legitimate written offer before rejecting OR accepting.

 

[raidermatt]

Just to add a bit more, if they TRULY felt that way about Disney as a brand AND as a company, we probably wouldn't be having these discussions in the first place.