Cable systems operator Comcast stunned the financial community Feb. 11 by proposing to buy the Walt Disney Company for stock, a deal that would be worth a reported $54 billion, with the Disney board saying they would study the Comcast offer. If the deal succeeds, it's estimated that it would create the world's largest communications company, according to several published reports.
The move comes at a time when Disney chieftain Michael Eisner is battling with two former board members, including Roy E. Disney, Walt Disney's nephew, about his performance and lack of succession plan.
One fallout from that battle was the recent news that Pixar, the computer-animation giant famous for its Disney-released films such as the Toy Story series and the recent hit Finding Nemo, was backing away from its partnership with the Disney operation.
"This is a very exciting moment," Comcast chief executive Brian Roberts was quoted as telling investors and analysts, saying the combine would make "one of the world's premiere entertainment and communications companies and, we believe, restore the Disney brand to prominence and the company to growth."
But Roberts also said Comcast would walk away from the deal "if need be," if the deal can't be done or if it can't be made "as friendly and amicable as possible."
Disney and Comcast already had a few things in common, especially professional sports. Disney holdings include ESPN, the all-sports cable network group, while Comcast owns the National Hockey League's Philadelphia Flyers. Disney had also owned baseball's Anaheim Angels, selling the team to Mexican-American businessman Arte Moreno less than a year after the Angels won the first World Series championship in the franchise's history.
Added together, Disney's and Comcast's 2003 revenues equal $45 billion, larger than Time Warner's $39.6 billion.
Reports indicated the timing, more than the fact of the bid, was what surprised financial analysts. "It's going for the jugular," Tradition Asiel Securities senior media analyst Paul Kim told the Associated Press. "(Roberts) is using this vulnerable time to force Disney's hand."
Comcast is said to believe they can improve the performance of several Disney cable television holdings, including ABC and the ABC Family Channel. But Kim also suggested Comcast might be playing a little out of its own league, being basically a cable firm. "I think," he told the AP, "they underestimate the complexity of being a broad-based media company."
However, Comcast is controlled by AT&T, who spun their cable holdings off to Comcast to avoid the negative media of anti-porn activists calling for a boycott of the telecommunications giant because they profited from adult entertainment.
AT&T has a 53 percent stake in Comcast and owns 66 percent of the voting stock. AT&T also appoints five of Comcast's ten board members.
