AMERICAS: Comcast's Hostile Offer Puts Disney in Play, THE

Global Finance, Apr 2004

Comcast, the biggest cable-TV operator in the US, made an unsolicited offer to buy Walt Disney, the American entertainment icon, but was swiftly rebuffed by Disney's board.

The $67 billion hostile stock-swap transaction, if successful, would create the biggest media company in the world. It would combine Comcast's communications capabilities with Disney's film studio and theme parks, the ABC broadcast network and ESPN sports programming.

The proposed marriage of industry leaders in distribution and content won praise from some analysts but also drew comparisons with the ill-fated merger of AOL and Time Warner.

"This is a combination that we believe would restore the Disney brand," says Comcast CEO Rrian L. Roberts.

Philadelphia-based Comcast took the opportunity to pounce on Disney at a time of dissension in the company's shareholder ranks and amid a campaign by the Disney family to oust long-time CEO Michael D. Eisner, who lost the chairman's title March 3 following a no-confidence vote at the company's annual meeting.

Comcast, the largest high-speed Internet service provider in the US, says the proposed merger would give Disney the broadband technology it has been seeking to enhance how its content is created and delivered.

"The rationale behind the merger is identical to the News Corporation-DirecTV combination, which is a combination of content and technology," says Jessica Reif Cohen, Merrill Lynch global media analyst.

"In this case, Comcast's broadband technology is superior to satellite, creating even more opportunities," she says.

Analysts also note that by acquiring ESPN, Comcast would be able to control the cost of its sports programming.

Comcast likely will have to sweeten its bid, however, if it hopes to consummate the Disney deal, analysts concur. As Global Finance went to press, however, Comcast was sticking to its original offer, and no new suitors had emerged for the Anaheim, California-based creator of Mickey Mouse and Donald Duck.