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COMCAST WANTING TO BUY DISNEY C&P
0311marine
Member Posts: 3,233
Comcast makes hostile bid for Disney
Deal would create world's largest media company
Reuters file, AP file
Comcast released a letter Wednesday sent to Disney CEO Michael Eisner, left, indicating that he had personally rejected Comcast CEO Brian Roberts' offer to enter into merger discussions earlier this week.
The Associated Press
Updated: 6:48 p.m. ET Feb. 11, 2004NEW YORK - Cable television giant Comcast Corp. made a surprise bid for The Walt Disney Co. Tuesday that would create the world's biggest media conglomerate and likely spell an end to the 20-year career of Disney chief Michael Eisner.
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Comcast, which said Eisner had rejected the idea of private talks, stunned the media world with its announcement early Wednesday. It was made just before Disney started two days of meetings with analysts at its flagship Walt Disney World theme park and hours before Disney was set to announce strong first quarter earnings.
The bid was initially valued at $54 billion, but investors bid up the price of Disney stock beyond the Comcast offer - a signal that Comcast would have to sweeten its bid to be successful.
Disney's board released a statement saying it would "carefully evaluate" Comcast's offer. But the board cautioned shareholders not to take any action in the meantime.
Comcast is moving at a time that Disney is struggling with internal strife over corporate governance concerns and Eisner's plans for succession, as well as lagging performance at key businesses such as ABC.
Timeline Key events in Comcast Corp.'s growth
1963 Ralph Roberts, former marketer of Muzak and owner of a belt and suspenders company, starts Comcast with 1,200-subscriber community antenna television system in Tupelo, Miss.
1969 American Cable Systems is renamed Comcast and incorporated in Pennsylvania.
1972 Roberts takes Comcast public.
1990 Son Brian Roberts, after working his way up through various posts, becomes president and a director and pursues vigorous expansion.
1996 Comcast completes $1.49 billion acquisition of E.W. Scripps Co.'s cable television operations, raising its total subscribers to 4.3 million.
1996 Comcast announces $520 million deal to buy majority ownership of Comcast-Spectacor, owner of Philadelphia Flyers and 76ers and the Spectrum and Corestates Center, the city's two indoor sports arenas.
2001 After acquiring rival cable systems including Jones Intercable Inc. and Lenfest Communications Inc., Comcast grows to nation's third largest cable operator with more than 8 million subscribers.
2002 Comcast completes acquisition of AT&T's cable division for about $29 billion in stock to become the nation's largest cable operator with about 22 million subscribers, nearly twice as many as second-place AOL Time Warner Inc.
Feb. 11, 2004 Proposes to buy media and entertainment powerhouse Walt Disney Co., owner of ABC and ESPN television networks, movie studios and theme parks, for about $54 billion in stock.
Print this
Disney shareholders will gather for their annual meeting March 3 in Philadelphia, where, coincidentally, Comcast is based.
Comcast, the nation's biggest cable systems operator, said it would also assume $11.9 billion in debt from Disney, which also owns ESPN, movie studios and theme parks.
The proposal came as Eisner is fending off criticism from former board members Roy E. Disney, the nephew of Disney founder Walt Disney, and Stanley E. Gold about his performance and lack of a succession plan as Disney's chief executive.
Comcast said Eisner declined earlier this week to discuss a possible merger.
"This is a very exciting moment," Comcast CEO 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."
As if to answer the bid, Disney released its first quarter earnings hours before originally planned.
Timeline Milestones in Disney's storied history
1923 Walt Disney and brother Roy O. Disney open Disney Brothers Studio in Hollywood.
1928 "Steamboat Willie," starring Mickey Mouse, debuts at New York's Colony Theatre.
1937 Disney Studio produces its first feature film, "Snow White and the Seven Dwarfs."
1940 Disney brothers take the company public.
1955 Disneyland theme park opens in Anaheim.
1966 Walt Disney dies. Roy becomes chairman.
1971 Walt Disney World theme park opens in central Florida. Roy Disney dies
1980 Ron Miller, Walt Disney's son-in-law, becomes president of the company.
1982 PCOT Center theme park opens in central Florida.
1984 Roy E. Disney, Walt's nephew and son of Roy O., resigns from the board to spearhead an effort to prevent a corporate takeover. He is instrumental in bringing Michael Eisner and Frank Wells to run the company, taking over from Miller.
1984 Roy E. Disney named chairman of Walt Disney Animation. Tokyo Disneyland opens.
1986 Company changes name to The Walt Disney Co.
1989 Company launches Disney-MGM Studios.
1991 Disney partners with Pixar Animation Studios to produce computer-animated films.
1992 Disneyland Paris opens.
1995 "Toy Story," the first film resulting from the Disney/Pixar deal, opens and is a phenomenal success.
1996 Company acquires Capital Cities/ABC, owner of the ABC television network.
2001 Downtown Disney and Disney's California Adventure theme park open in Anaheim.
2003 Roy E. Disney and fellow board member Stanley Gold resign and begin public campaign to oust Eisner, saying the company's stock has underperformed under him for nearly a decade.
Jan. 30, 2004 Pixar announces an end to its wildly successful partnership with Disney after protracted talks to renew their contract collapse over profit sharing and copyright disputes.
Feb. 11, 2004 Cable TV giant Comcast Corp. offers to buy The Walt Disney Co. for about $54 billion in stock.
Source: The Associated Press Print this
The earnings easily beat analyst expectations and, Eisner said in a statement, showed the company was firmly on a turnaround that would see 30 percent earnings growth this year and double digit growth until at least 2007.
Eisner made a brief reference to the bid at the beginning of a conference call to discuss the earnings, saying the board had asked Disney's management and advisers to "to provide an in-depth analysis of the proposal to enable the board to respond appropriately."
Analysts said the combination made sense, but questioned whether Comcast would sweeten its offer sufficiently.
"Strategically, from Comcast's point of view, it would be a terrific move," said Janna Sampson, co-Manager of the AmSouth Select Equity Fund and director of Portfolio Management at Oakbrook Investments. "I think it's probably not a good deal for Disney shareholders at the price on the table today."
Related stories
Disney's quarterly profit rises
Disney planning for Eisner's succession
Forbes: Disney the man vs. Disney the company
Analysts were not surprised that Comcast, which has access to cable subscribers, would be interested in Disney, with its suite of top-rated cable channels and visible brand.
But they were taken off guard by the timing. Disney's stock, which has lagged over the past six years or so, has risen sharply over the past 12 months and earnings have also climbed on the strength of Disney's film slate and a turnaround at its theme parks.
But Eisner has been under heavy pressure as talks to extend Disney's lucrative deal with Pixar Animation Studios collapsed and dissident shareholders raised questions about the independence of Disney's board.
"It's going for the jugular," said Paul Kim, senior media analyst at Tradition Asiel Securities. "He (Roberts) 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.
Profile Michael Eisner at a glance
Background information on The Walt Disney Company's chairman
Name: Michael Eisner
Born: March 7, 1942 in Mount Kisco, N.Y.
Education: Bachelor's degrees in English literature and theater from Lawrenceville School in New Jersey in 1960 and Denison University in Ohio in 1964.
Career: Began career at ABC in 1966, and was named vice president of daytime programming in 1971. As senior vice president for prime time production and development, promoted programs including "Happy Days," "Welcome Back Kotter" and "Starsky and Hutch." Became president and chief operating officer for Paramount Pictures in 1977 and in 1984 was named chief executive officer and chairman of The Walt Disney Co.
Family: Wife, Jane. They have three sons: Breck, Eric and Anders.
Source: The Associated Press Print this
In a conference call Wednesday, Comcast's Steve Burke, the head of the company's cable division and a former Disney executive, sounded many of the same notes as dissident shareholders Roy Disney and Stanley Gold.
"We think restoring Disney animation to its rightful place is important," Burke said, echoing a major criticism levied by Roy Disney. "Our goal would be to again place Disney animation in the center of the company."
Burke also criticized Disney's $5.3 billion purchase of Fox Family Worldwide, a deal Eisner has admitted was a mistake at that price. The company has not succeeded in boosting ratings or profits at its renamed ABC Family Channel.
"We believe it operates at around break even," Burke said. "We can help address this underperformance."
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.
Comcast also released a letter sent to Eisner indicating that Eisner had personally rejected Roberts' offer to enter into discussions about a merger earlier in the week.
The letter from Roberts called it "unfortunate" that Eisner was not willing to enter into discussions. "Given this, the only way for us to proceed is to make a public proposal directly to you and your board," the letter stated.
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.
That's a relatively small premium for a takeover offer, but Comcast may be counting on the fact that other potential suitors in the media industry would surely face tougher regulatory scrutiny in Washington. Most of Comcast's holdings are in cable TV systems, while Disney's are in broadcast, cable and "content" businesses like movie studios.
In a sign that investors expect an extended fight, Disney's shares shot up $3.52, or 15 percent to $27.60 in very heavy trading on the New York Stock Exchange, above Comcast's current offer. Comcast's Class A shares tumbled $2.70, or 8 percent, to $31.23 on the Nasdaq Stock Market.
Disney and Comcast together had $45 billion in revenues last year. If a deal is reached to combine the companies, they would edge out Time Warner, which had $39.6 billion in revenues last year, atop the heap of media and communications companies.
Comcast merged with AT&T Broadband in November 2002, making it the largest cable TV company in the country with 21 million subscribers.
Comcast has several holdings in media content, but has made no secret of its ambitions to acquire more. It has 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.
Deal would create world's largest media company
Reuters file, AP file
Comcast released a letter Wednesday sent to Disney CEO Michael Eisner, left, indicating that he had personally rejected Comcast CEO Brian Roberts' offer to enter into merger discussions earlier this week.
The Associated Press
Updated: 6:48 p.m. ET Feb. 11, 2004NEW YORK - Cable television giant Comcast Corp. made a surprise bid for The Walt Disney Co. Tuesday that would create the world's biggest media conglomerate and likely spell an end to the 20-year career of Disney chief Michael Eisner.
advertisement
Comcast, which said Eisner had rejected the idea of private talks, stunned the media world with its announcement early Wednesday. It was made just before Disney started two days of meetings with analysts at its flagship Walt Disney World theme park and hours before Disney was set to announce strong first quarter earnings.
The bid was initially valued at $54 billion, but investors bid up the price of Disney stock beyond the Comcast offer - a signal that Comcast would have to sweeten its bid to be successful.
Disney's board released a statement saying it would "carefully evaluate" Comcast's offer. But the board cautioned shareholders not to take any action in the meantime.
Comcast is moving at a time that Disney is struggling with internal strife over corporate governance concerns and Eisner's plans for succession, as well as lagging performance at key businesses such as ABC.
Timeline Key events in Comcast Corp.'s growth
1963 Ralph Roberts, former marketer of Muzak and owner of a belt and suspenders company, starts Comcast with 1,200-subscriber community antenna television system in Tupelo, Miss.
1969 American Cable Systems is renamed Comcast and incorporated in Pennsylvania.
1972 Roberts takes Comcast public.
1990 Son Brian Roberts, after working his way up through various posts, becomes president and a director and pursues vigorous expansion.
1996 Comcast completes $1.49 billion acquisition of E.W. Scripps Co.'s cable television operations, raising its total subscribers to 4.3 million.
1996 Comcast announces $520 million deal to buy majority ownership of Comcast-Spectacor, owner of Philadelphia Flyers and 76ers and the Spectrum and Corestates Center, the city's two indoor sports arenas.
2001 After acquiring rival cable systems including Jones Intercable Inc. and Lenfest Communications Inc., Comcast grows to nation's third largest cable operator with more than 8 million subscribers.
2002 Comcast completes acquisition of AT&T's cable division for about $29 billion in stock to become the nation's largest cable operator with about 22 million subscribers, nearly twice as many as second-place AOL Time Warner Inc.
Feb. 11, 2004 Proposes to buy media and entertainment powerhouse Walt Disney Co., owner of ABC and ESPN television networks, movie studios and theme parks, for about $54 billion in stock.
Print this
Disney shareholders will gather for their annual meeting March 3 in Philadelphia, where, coincidentally, Comcast is based.
Comcast, the nation's biggest cable systems operator, said it would also assume $11.9 billion in debt from Disney, which also owns ESPN, movie studios and theme parks.
The proposal came as Eisner is fending off criticism from former board members Roy E. Disney, the nephew of Disney founder Walt Disney, and Stanley E. Gold about his performance and lack of a succession plan as Disney's chief executive.
Comcast said Eisner declined earlier this week to discuss a possible merger.
"This is a very exciting moment," Comcast CEO 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."
As if to answer the bid, Disney released its first quarter earnings hours before originally planned.
Timeline Milestones in Disney's storied history
1923 Walt Disney and brother Roy O. Disney open Disney Brothers Studio in Hollywood.
1928 "Steamboat Willie," starring Mickey Mouse, debuts at New York's Colony Theatre.
1937 Disney Studio produces its first feature film, "Snow White and the Seven Dwarfs."
1940 Disney brothers take the company public.
1955 Disneyland theme park opens in Anaheim.
1966 Walt Disney dies. Roy becomes chairman.
1971 Walt Disney World theme park opens in central Florida. Roy Disney dies
1980 Ron Miller, Walt Disney's son-in-law, becomes president of the company.
1982 PCOT Center theme park opens in central Florida.
1984 Roy E. Disney, Walt's nephew and son of Roy O., resigns from the board to spearhead an effort to prevent a corporate takeover. He is instrumental in bringing Michael Eisner and Frank Wells to run the company, taking over from Miller.
1984 Roy E. Disney named chairman of Walt Disney Animation. Tokyo Disneyland opens.
1986 Company changes name to The Walt Disney Co.
1989 Company launches Disney-MGM Studios.
1991 Disney partners with Pixar Animation Studios to produce computer-animated films.
1992 Disneyland Paris opens.
1995 "Toy Story," the first film resulting from the Disney/Pixar deal, opens and is a phenomenal success.
1996 Company acquires Capital Cities/ABC, owner of the ABC television network.
2001 Downtown Disney and Disney's California Adventure theme park open in Anaheim.
2003 Roy E. Disney and fellow board member Stanley Gold resign and begin public campaign to oust Eisner, saying the company's stock has underperformed under him for nearly a decade.
Jan. 30, 2004 Pixar announces an end to its wildly successful partnership with Disney after protracted talks to renew their contract collapse over profit sharing and copyright disputes.
Feb. 11, 2004 Cable TV giant Comcast Corp. offers to buy The Walt Disney Co. for about $54 billion in stock.
Source: The Associated Press Print this
The earnings easily beat analyst expectations and, Eisner said in a statement, showed the company was firmly on a turnaround that would see 30 percent earnings growth this year and double digit growth until at least 2007.
Eisner made a brief reference to the bid at the beginning of a conference call to discuss the earnings, saying the board had asked Disney's management and advisers to "to provide an in-depth analysis of the proposal to enable the board to respond appropriately."
Analysts said the combination made sense, but questioned whether Comcast would sweeten its offer sufficiently.
"Strategically, from Comcast's point of view, it would be a terrific move," said Janna Sampson, co-Manager of the AmSouth Select Equity Fund and director of Portfolio Management at Oakbrook Investments. "I think it's probably not a good deal for Disney shareholders at the price on the table today."
Related stories
Disney's quarterly profit rises
Disney planning for Eisner's succession
Forbes: Disney the man vs. Disney the company
Analysts were not surprised that Comcast, which has access to cable subscribers, would be interested in Disney, with its suite of top-rated cable channels and visible brand.
But they were taken off guard by the timing. Disney's stock, which has lagged over the past six years or so, has risen sharply over the past 12 months and earnings have also climbed on the strength of Disney's film slate and a turnaround at its theme parks.
But Eisner has been under heavy pressure as talks to extend Disney's lucrative deal with Pixar Animation Studios collapsed and dissident shareholders raised questions about the independence of Disney's board.
"It's going for the jugular," said Paul Kim, senior media analyst at Tradition Asiel Securities. "He (Roberts) 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.
Profile Michael Eisner at a glance
Background information on The Walt Disney Company's chairman
Name: Michael Eisner
Born: March 7, 1942 in Mount Kisco, N.Y.
Education: Bachelor's degrees in English literature and theater from Lawrenceville School in New Jersey in 1960 and Denison University in Ohio in 1964.
Career: Began career at ABC in 1966, and was named vice president of daytime programming in 1971. As senior vice president for prime time production and development, promoted programs including "Happy Days," "Welcome Back Kotter" and "Starsky and Hutch." Became president and chief operating officer for Paramount Pictures in 1977 and in 1984 was named chief executive officer and chairman of The Walt Disney Co.
Family: Wife, Jane. They have three sons: Breck, Eric and Anders.
Source: The Associated Press Print this
In a conference call Wednesday, Comcast's Steve Burke, the head of the company's cable division and a former Disney executive, sounded many of the same notes as dissident shareholders Roy Disney and Stanley Gold.
"We think restoring Disney animation to its rightful place is important," Burke said, echoing a major criticism levied by Roy Disney. "Our goal would be to again place Disney animation in the center of the company."
Burke also criticized Disney's $5.3 billion purchase of Fox Family Worldwide, a deal Eisner has admitted was a mistake at that price. The company has not succeeded in boosting ratings or profits at its renamed ABC Family Channel.
"We believe it operates at around break even," Burke said. "We can help address this underperformance."
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.
Comcast also released a letter sent to Eisner indicating that Eisner had personally rejected Roberts' offer to enter into discussions about a merger earlier in the week.
The letter from Roberts called it "unfortunate" that Eisner was not willing to enter into discussions. "Given this, the only way for us to proceed is to make a public proposal directly to you and your board," the letter stated.
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.
That's a relatively small premium for a takeover offer, but Comcast may be counting on the fact that other potential suitors in the media industry would surely face tougher regulatory scrutiny in Washington. Most of Comcast's holdings are in cable TV systems, while Disney's are in broadcast, cable and "content" businesses like movie studios.
In a sign that investors expect an extended fight, Disney's shares shot up $3.52, or 15 percent to $27.60 in very heavy trading on the New York Stock Exchange, above Comcast's current offer. Comcast's Class A shares tumbled $2.70, or 8 percent, to $31.23 on the Nasdaq Stock Market.
Disney and Comcast together had $45 billion in revenues last year. If a deal is reached to combine the companies, they would edge out Time Warner, which had $39.6 billion in revenues last year, atop the heap of media and communications companies.
Comcast merged with AT&T Broadband in November 2002, making it the largest cable TV company in the country with 21 million subscribers.
Comcast has several holdings in media content, but has made no secret of its ambitions to acquire more. It has 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.