This may be very...very good news...for the meantime

[llrain]

http://biz.yahoo.com/rc/040217/media_disney_comcast_1.html

read carefully. Sounds as if comcast doesnt want Disney anymore....AS if they arent gonna offer a higher price.


YIPPIEEEEE!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
THE WORLD IS SAVED!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

 

[Razor Roman]

Hopefully this won't cause a drop in Disney stock price, and make it easier for them or someone else to buy shares up on the open market now.

 

[KNWVIKING]

Well, it almost has to come down with an announce like that from Comcast. Let's face it, it's only where it's at now because of Comcast's initial bid. If Comcast keeps changing its mind based on current stock price, the stock will just yo-yo up and down at each announced intention.

 

[ear_poppin]

Althoug Disney also posted terrific profit reports last week which may help to keep the price up! Lets hope

 

[DisneyKidds]

Interesting.

Not what most expected................but interesting nonetheless.

Yes, it is quite possible that Disney shares will fall if the takeover bid is history. However, it would seem to make sense that it wouldn't come down below what it was trading at before Compcast made the bid. At those prices Comcast thought that Disney could be had, but they were obviously wrong. So I don't think we need to worry about Disney shares falling so much that Disney becomes a more attractive target.

If this particular raid has been foiled and noone else throws their hat into the ring it is good for the existence of Disney as an independant company. My question is what becomes of Eisner.

Does the stockholders, Wall Street, and the board view an Eisner led Disney as so strong at this point that Disney could survive a credible challenge by a company like Comcast, thereby realizing little need for change? Or do they see this as dodging a bullet, thereby realizing the need to change the direction of the company and it's leadership............leadership that allowed Disney to be put in the position of having to defend a takeover in the first place? That will be crucial.

Once the Comcast offer was made the consensus seemed to be that Eisner had reached the end of the line. If this whole thing blows over will that change the consensus view on the big cheese?

 

[KNWVIKING]

Comcast backs out. The Big Cheese gets on the podium in two weeks in Philly bragging about the stock price, the dividend, the up swing in profits and no more Comcast. Who's going to ask him to resign other then us fanatics ? Maybe this was all orchestrated from day one by ME. Maybe he's ROTFLHAO ???

 

[FantasticDisFamily]

Those are all excellent questions - it will be interesting indeed to see what happens.

One thing is for certain - Disney never gives us a dull moment and provide me with wonderful classroom fodder for numerous discussions.


Hmm....may I take those questions of yours into the classroom?

Deb

 

[raidermatt]

If Comcast thought they could get Disney at under $27, the only word that comes to mind is moronic. If they are/were serious about this, I'm sure they were willing to go higher than $27. If not, I'm at a loss to explain how they could have thought they could pull it off.

Now, it maybe that while they were willing to go higher, they aren't willing to go as high as they now think they will need to.

Or, they could be feeding this stuff to the media in an effort to keep Disney's stock price down.

Or, it simply could be a false report.

Disney's stock was up again earlier today, so it doesn't look like the investors believe the deal is dead.

 

[GrimGhost]

Matt,

I guess your glass really is half-empty.

In all seriousness though, I know you're just trying to analyze this intelligently and realistically.

I do enjoy and generally agree with your views! though I hope this is the end of this fiasco..it just made me too nervous about Disney not being independent

 

[manning]

Wallstreet didn't react the way Comcast expected.

 

[raidermatt]

Wallstreet didn't react the way Comcast expected.

I guess that's possible, but Wall Street reacted the way they usually react to these things... target's stock goes up, acquirer's goes down... Maybe they just didn't expect it to be so extreme.

I guess your glass really is half-empty.

Oh, don't get me wrong, I really don't think a Comcast takeover is the best thing that could happen. I just think that its better than the status quo.

But hopefully another option will present itself, either through Roy, or another possible suitor.

 

[DisneyKidds]

Matt, I agree it does seem strange that Comcast didn't up the ante. I think most agreed from the beginning that such a move was inevitable. Most analysts I read seemed to agree that Comcast would likely push to $31 dollars, but that still might not be enough. Is Comcast playing games by falsely leaking word that they don't intend pursue Disney at a higher price? Perhaps.........but I'm not sure what that gains them. It isn't like Disney stock has been on a steady rise since the first offer, thereby presenting a need for Comcast to play games in an attempt to halt the rise. Disney stock jumped on the day of the offer but hovered in the $27 to $28 range since. Even if Disney stock comes back down, I'm still not sure Comcast gains much. I suppose they could say that a $31 offer would represent a 30% premium over Disney stock trading at $24, vs a 13% premium over a Disney stock trading at $27.50. Either way it would still be $31. However, perhaps the perception that people are getting a 30% premium as opposed to a 13% premium would make stockholders more likely to support a vote of acceptance. Maybe that is what is going on? I agree we may not have heard the last.

Professor, if you would like any of them, my questions are your questions. Let us know the answers .

 

[FantasticDisFamily]

Thanks Disneykidds! I have "assigned" my Management Principles class to watch this play out and "practice thinking strategically" so I probably will throw those questions at them. Although it would be much more fun if I had a group of seniors right now!

I might have to break my own rule of not having students do anything with Disney that is graded.

Matt, it doesn't surprise me at all that Comcast didn't up the ante, and I don't think it is a matter of false info to the media. Of course I could be wrong on this. My take was that Comcast's strategy long term is to save broadcast expenses (including royalties) wherever possible as long as the cost doesn't exceed the investment.

When they perceived a weakness on Disney's part (specifically the resignation of Roy, attempt in progress to remove ME and others from the board) they made an attempt to acquire Disney for one purpose - to acquire ESPN. This would save them bushels of money in terms of royalty fees and provide the potential to generate bushels when they turned around and sold access to cable providers in areas they don't service.

Simpistic? Maybe...but it would explain why the Disney deal was only worth a certain amount, and why there really wasn't any serious discussion of cash on the table - all stock swap.

The one bit that hasn't had a great deal of discussion is possible SEC take on the whole thing. Might it be considered a problem in that realm? Too much vertical integration? Potential violation of anti-trust laws? After all what guarantee would there be that Comcast would turn around and sell the rights to broadcast ESPN to other cable providers? SEC could very well see that as predatory and refuse to let the deal consummate.

Deb

 

[DisneyKidds]

they made an attempt to acquire Disney for one purpose - to acquire ESPN

I heard $10 billion over the course of the next 5 years as the amount Comcast would save by not having to pay fees to carry ESPN on their networks. Actually, that is why I thought Comcast would up the ante. The proposed deal was a straight tax free stock swap with no cash out of pocket. I'd think that the prospect of saving $10 billion in out of pocket expenses in the short term would allow them to drop a little cash on the deal now as they would recoup it relatively quickly.

On another note, a report I heard this am talked about Disney and it's most valuable assets. It listed ESPN as the number one horse in the Disney stable, followed by the theme parks and resorts division, then ABC television and radio.

 

[FantasticDisFamily]

ESPN is indeed the most valuable in terms of pure "cash" value. Not necessarily the overall most valuable but the reputation, goodwill, warm fuzzy feeling value of Mickey and friends is tough to put a dollar value on.

Although even the most cynical of investors recognize there is value there - not to be trashed lightly.

The $10 billion saved over 5 years is still only 25% of the latest value of stock. Presuming they could also generate an equal amount in royalties by licensing broadcast rights to other cable providers that is making back 50% of the investment in 5 years. Not a bad ROI but still not the whole enchilada. That could possibly be realized through other venues...for example use of "vault" materials without having to pay additional royalties.

Imagine what they might save by being able to broadcast "Pirates of the Carribbean" on pay per view for instance?

However, I imagine that there were plans to sell large chunks as well.

Again, my take on the whole thing and since I am not a fly on the strategic planning room wall at Comcast I could be wrong.

Deb

 

[DisneyKidds]

Not a bad ROI but still not the whole enchilada.

Agreed, but in the big picture wouldn't you agree that 5 years is relatively short term? If Comcast were to prevail hopefully we'd be getting management who thinks more long term. Eisner hasn't done that in many years.

 

[FantasticDisFamily]

In many ways 5 years is relatively short term. However, in the telecom business look at how much has changed in 5 years.

ESPN is hot now...will it remain so? Great uncertainty in that decision, therefore increased risk. Guess we may be treading into debate board territory - no one can know for sure.

Deb

 

[raidermatt]

...but it would explain why the Disney deal was only worth a certain amount,

Sure, but the strange (perhaps moronic was too strong...) thing is that if their offer really was what they thought was the worth, they really just wasted a lot of time. It just wasn't going to happen.

As others have said, though, that assumes all the cards are on the table, which they most likely are not.