Comcast makes surprise US$50bil bid for Disney

LOS ANGELES: US cable operator Comcast Corp has launched a surprise bid to buy Walt Disney Co for about US$50bil in stock, a deal that would create the world’s largest media company and further threaten embattled Disney chief executive Michael Eisner. 

Comcast chief executive Brian Roberts said he decided to make the unsolicited all-stock offer public after Eisner personally turned it down on Monday. Eisner is already under fire from Disney founding family shareholders bent on ousting him. 

The proposed deal could redraw the US media landscape, inviting comparisons with the 2001 merger of America Online and Time Warner which was initially much heralded but dismally failed to meet expectations. 

The Disney board has asked bank advisers to analyse the offer, which would join the No. 1 US cable operator with Hollywood’s top film studio, broadcaster ABC, sports channel ESPN, worldwide theme parks and a stable of animated characters from Mickey Mouse to the Lion King. 

If the deal goes through, Disney and Comcast would follow in the footsteps of Time Warner and News Corp, both merger-forged media conglomerates that also combine programming and TV distribution. But a Disney-Comcast combination would overpower its two rivals by revenue. 

Disney shares were bid up by as much as 16% on Wednesday on news of the proposed deal, while Comcast shares fell as much as 9%, as investors bet that the latter's offer would be raised or topped by a rival. 

“The price is too low,” said Mel Tukman of Tukman Capital Management, which manages 15 million shares of Disney. “(Disney executives) are managing to improve fundamentals on almost every front while this is happening.” 

Comcast’s offer would exchange 0.78 of its class A share for each Disney share. 

Roberts, considered one of the media industry’s savviest dealmakers, sent Eisner an open letter on Wednesday saying it was “unfortunate” that the Disney chairman and chief executive had rejected friendly merger talks. 

“Given this, the only way for us to proceed is to make a public proposal directly to you and your board,” Roberts said. 

Federal Communications Commission chairman Michael Powell said the merger would get “ruthless and rigorous scrutiny” if it proceeded. Roberts, however, predicted a merger could be completed in a year or less. – Reuters 


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