Walt Disney was on Wednesday fighting for survival after the United States’s biggest cable television company, Comcast, laid siege to the magic kingdom with a $66-billion bid.
The Disney empire, which enjoyed a renaissance in the late 1980s and early 1990s, has foundered for the past five years, leading to persistent speculation that it could be subject to a bid. Even so, Wednesday’s hostile approach for one of the most famous names in popular culture stunned the industry.
Together, Comcast and Disney would have higher revenues than Time Warner, the largest media company in the world.
Comcast went public with its bid after Disney’s chairman and chief executive, Michael Eisner, rejected a behind the scenes approach from the cable company earlier this week. The offer was consistent with Comcast’s history. It began life as a small cable company in Mississippi in 1963 and has grown through an insatiable appetite for acquisitions. Although little known outside America, it has more than 21-million cable and high-speed internet customers and revenues of more than $18-billion. The company described its bid for Disney as ”the logical next step”.
”The ball is in Disney’s court and hopefully people will see this as a great combination. We hope to make this as friendly and amicable as possible,” said Brian Roberts, Comcast’s chief executive.
The bid has come at a time when Disney is looking particularly vulnerable. The company’s animation division has suffered a string of flops including Treasure Planet, Atlantis: The Lost Empire, and the Emperor’s New Groove. ABC, the American TV station owned by Disney, is by far the least profitable of the four broadcast networks and the theme parks division has been weak since the terrorist attacks of 2001.
Disney urged shareholders not to take any action. The company said it would ”carefully evaluate” the proposal.
Eisner, one of the longest standing bosses on Wall Street, has shown little desire to step aside despite intense pressure after years of sluggish financial performance.
He has come under attack by Roy Disney, nephew of the company founder, who recently accused Eisner of turning the company into one that was ”rapacious, soulless and always looking for the quick buck”.
Eisner (61) was also dealt a blow after failing to renew the company’s lucrative distribution deal with Pixar, the computer animation studio behind Toy Story and Finding Nemo. Pixar, often compared to the golden age of Disney animation, broke off discussions two weeks ago and is looking for a new partner.
Paul Kim, a Wall Street analyst at Tradition Asiel Securities, said Comcast as ”going for the jugular” by launching a bid now.
The offer is $5-billion higher than Disney’s market value. – Guardian Unlimited Â