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Comcast makes $66 billion Disney proposal

#1 User is offline   QuickGold 

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Posted 11 February 2004 - 11:38 AM

From the Orlando Sentinel..

Quote

NEW YORK -- The nation's largest cable TV operator, Comcast Corp., said early today that it wanted to buy the Walt Disney Co. for about $66 billion.

The surprise proposal to purchase Disney, the media and theme park titan, was enclosed in a letter sent by Comcast President and CEO Brian L. Roberts to Disney Chairman Michael Eisner. Comcast made the letter public this morning.

In the letter, Roberts said he spoke with Eisner earlier this week about a merger of the two companies, but was rebuffed.

"It is unfortunate that you are not willing to do so," Roberts wrote to Eisner. "Given this, the only way for us to proceed is to make a public proposal directly to you and your board."

Under the offer, Comcast would trade $54 billion in stock for a majority interest in the new company. Comcast would also assume Disney's $11.9 billion in debt, the Associated Press reported.

Comcast's stunning proposal was made as Eisner is fending off criticism from former board members Roy E. Disney, the nephew of Disney founder Walt Disney, and Stanley P. Gold about his performance and lack of a succession plan as Disney's chief executive.

It also comes as Wall Street analysts who track the company and major institutional investors gather in Orlando today for an investor conference. Disney had been expected to release its fiscal first quarter earnings this afternoon. Facing the takeover bid the company released its results this morning instead.

Disney reported a sharp rise in quarterly earnings. Net income was $688 million, or 33 cents per share, in the fiscal first quarter ended in December, compared with $36 million, or 2 cents per share, in the year-ago quarter.

"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."

Noting that the offer for Disney had already been rejected by Eisner, an analyst asked Roberts what would come next. "The ball's in Disney's court," Roberts replied.

Calls to Disney representatives Zenia Mucha, Michelle Bergman and John Spelich were not immediately returned early Wednesday. Michael Citrick, spokesman for Disney and Gold, said they had no immediate comment.

Paul Kim, senior media analyst at Tradition Asiel Securities, said that while Roberts making a bid for Disney in and of itself is not surprising, the timing is.

"It's going for the jugular," he said. "He 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.

Under the merger, Comcast said it would issue 0.78 of a share of its stock for each Disney share, and Disney shareholders would retain 42 percent of the combined company.

The deal values each Disney share at $25.69, a 7 percent premium over their closing price Tuesday, or more than $5 billion total. Comcast shares ended trading Tuesday at $32.94; Disney shares finished at $24.08.

Philadelphia-based Comcast merged with AT&T Broadband in November 2002, and the company noted that merger in its sales pitch Wednesday.

"Our management team has a proven track record of successful integration of our merger partners," Roberts said.

Comcast has more than 21 million total cable television subscribers in 35 states and Washington, D.C. In October, the company reported net income of $3.18 billion and stronger-than-expected demand for premium services including high-speed Internet access. It has not yet released its results for the most recent quarter.

Sean Mussenden can be reached at smussenden@orlandosentinel.com or 407-420-5664. Wire services were used in this report.

Copyright © 2004, Orlando Sentinel


Can we say bad news?
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#2 User is offline   disneyprincess 

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Posted 11 February 2004 - 02:10 PM

Yes, I'm glad Eisner didn't screw this one up yet.
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#3 User is offline   wishingtree 

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Posted 11 February 2004 - 04:35 PM

DisneyPrincess said:

Yes, I'm glad Eisner didn't screw this one up yet.


"Yet" is the key word!!! He probably has other ideas, something more beneficial to him.
Jim

"Tact is for people who aren't witty enough to be sarcastic!!!"
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Posted 11 February 2004 - 07:18 PM

This brings back not so fond memories of the 80's.
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Posted 11 February 2004 - 08:23 PM

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Comcast Likely to Keep Disney Theme Parks

1 hour, 27 minutes ago

Add Entertainment - Reuters Industry to My Yahoo!

By Jui Chakravorty

NEW YORK (Reuters) - Mickey Mouse will stay on the Walt Disney payroll welcoming children to the Magic Kingdom if Comcast Corp.'s offer for the company succeeds, and the bidders said they would be all ears when it comes to sprucing up the Disney theme parks.


Reuters Photo



As details of Comcast's surprise $50 billion offer for Disney began to emerge on Wednesday, among the most asked questions was: What about the theme parks?

Comcast executives told Reuters they would be more inclined to keep the parks than to sell them.

"We believe the theme parks could be revitalized. It's a great business," Stephen Burke, executive vice president at Comcast, told Reuters in an interview. Burke is a former Disney executive and former president of Euro Disney.

Comcast said it plans to drive attendance at the parks through advertising and cross-promotion at attractions, hotels and concessions.

That view makes sense, according to analysts who called the parks a key to the Disney brand.

"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.

Disney's parks business has struggled to recover from the recent U.S. recession and the tourism slump that followed the Sept. 11 attacks.

Still, the business -- encompassing such properties as the original Disneyland park in California, Disney World in Florida, Tokyo Disneyland and a minority stake in debt-strapped Euro Disney -- accounts for nearly a third of Disney's revenue and has unmatched brand power.

While many theme parks around the globe continue to suffer from decreased visitors, attendance at Disney parks has been improving.

In December Walt Disney said its California Adventure saw a 13 percent rise in 2003 visitors and Disney's Magic Kingdom at Walt Disney World and Tokyo Disneyland were No. 1 and 2, respectively, worldwide in visitors for the second year in a row.

Industry sources say Comcast would never sell the parks and risk alienating the children drawn to the parks by Mickey Mouse, Donald Duck and the other characters.

"The Disney theme parks, unlike Universal or SixFlags, are a Disney product, and have that cache. It's the perfect family fare and the parks have no value without the Disney characters," said Ritholtz.

Another incentive for Comcast to keep them is just how hard it would be to sell them, analysts said.

Any buyer would have to negotiate a cumbersome license in perpetuity for the rights to the names and characters, Cathay Financial analyst Andy Baker said.

"They wouldn't want to sell rights for Mickey Mouse and the other guys, and what's a Disney theme park without them?" said Maxim Group's Ritholtz.

"My guess is that Comcast will keep it all together."

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Posted 12 February 2004 - 01:23 PM

There's an interesting series of articles on this topic at http://news.com.com/...l?tag=nefd_lede
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