Slashdot Mirror
Comcast Wants To Buy Disney For $66 Billion
BenBenBen writes "Comcast have made a surprise $66 billion bid for Disney. The public bid (aimed at swaying shareholders) follows a period of secret negotiation which resulted in Eisner saying no.
Comcast has a statement on their website and there is better coverage available here."
No, a hostile takeover is where you buy a controlling percentage of the company's stock, to overthrow their board.
This is just a business tactic to try and sway the devil that is Eisner..
How Jaded Are You?
To be more precise, it's generally when you offer all of the minority shareholders in a company a premium price for their stock (often in the neighborhood of 40 to 50% above market value) in an attempt to gain controlling interest.
This is generally only possible with companies where the majority of the stock is held by a large number of minority shareholders. It would not be possible with, say, Microsoft, where Bill Gates still owns over 50% of the stock.
Usually a hostile takeover is done by so-called corporate raiders, whose plans are to dismantle the company and sell the pieces for more than the entire company would be worth if sold as one piece.
I say ---fine! What you are going to see is, competing cable/sat companies avoiding as much any Disney-branded product as possible, lest they subsidize their own competition.
This merger proposal is all about Roberts' ego.
Here's the letter:
**************
February 11, 2004
Mr. Michael D. Eisner
The Walt Disney Company
500 South Buena Vista Street
Burbank, California 91521
Dear Michael:
I am writing following our conversation earlier this week in which I proposed that we enter into discussions to merge Disney and Comcast to create a premier entertainment and communications company. It is unfortunate that you are not willing to do so. Given this, the only way for us to proceed is to make a public proposal directly to you and your Board.
We have a wonderful opportunity to create a company that combines distribution and content in a way that is far stronger and more valuable than either Disney or Comcast can be standing alone. To this end, we are proposing a tax-free stock for stock merger in which Comcast would issue 0.78 of a share of its Class A voting common stock for each share of Disney. This represents a premium of over $5 billion for your shareholders, based on yesterday's closing prices. Under our proposal, your shareholders would own approximately 42% of the combined company.
The combined company would be uniquely positioned to take advantage of an extraordinary collection of assets. Together, we would unite the country's premier cable provider with Disney's leading filmed entertainment, media networks and theme park properties. In addition to serving over 21 million cable subscribers, Comcast is also the country's largest high speed internet service provider with over 5 million subscribers. As you have expressed on several occasions, one of Disney's top priorities involves the aggressive pursuit of technological innovation that enhances how Disney's content is created and delivered. We believe this combination helps accelerate the realization of that goal-whether through existing distribution channels and technologies such as video-on-demand and broadband video streaming or through emerging technologies still in development-to the benefit of all our shareholders, customers and employees.
We believe that improvements in operating performance, business creation opportunities and other combination benefits will generate enormous value for the shareholders of both companies. Together, as an integrated distribution and content company, we will be best positioned to meet our respective competitive challenges.
We have a stable and respected management team with a great track record for creating shareholder value. In fact, our shares have consistently outperformed leading stock indices by significant margins, including the S&P 500 by a margin of more than 2 to 1 since Comcast went public in 1972. The Comcast management team greatly appreciates and is highly respectful of the Disney heritage. We know that there are many talented executives at Disney who we envision would also play a key role in managing the combined company. We also would welcome directors from your Board joining our Board. We have analyzed the issues associated with regulatory approval and are confident that all necessary approvals can be obtained in a timely fashion. Given the landscape that has evolved in our industry over the past few years, the creation of integrated content and distribution companies is essential to increasing the level of competition. The FCC's existing program access and program carriage rules ensure that the combined company will continue to make all of its satellite-delivered national and regional cable networks available on a non-exclusive, non-discriminatory basis and that there will be no discrimination against unaffiliated programming services, all consistent with the undertakings made by News Corp. in its recent acquisition of DirecTV. We hope that the Disney Board will pursue the opportunity that this proposed combination presents to your shareholders.
Very truly yours,
Brian L. Roberts
President and Chief Executive Officer
Cc: Board of Directors,
The Walt Disney Company
They're the largest cable provider here, and I think they are the number 2 ISP, maybe the largest broadband provider, not sure. At any rate I have comcast basic extended cable, and internet access and that runs about $100 a month, so multipy that by a few mil and they're probably doing ok.
This suprises me though, I expected Microsoft to attempt to by Comcast at some point, but not Comcast to buy Disney...
"Windows Me offers tremendous reliability and stability improvements..." -- Paul Thurott
Yah, this is almost as crazy as AOL buying Time Warner.
Seems the quick-profit-by-merger fad in business strategy hasn't quite fallen out of fashion yet.
Comcast has gobbled up most of the cable providers on the East Coast, at least; they are also cable broadband internet providers and a telephone company (though they're not a major player, as Bell Atlantic (NYNEX) is the big fish in that sector in this part of the US).
AOL was just a dial-up ISP. Comcast has cable tv, broadband ISP, QVC, sports ownership, etc. They're much more diversified than AOL.
blenderking.com over 50,000 blenders can't be wrong
Comcast hs around 5 million broadband internet customers and over 20 million cable television subscribers, last time i checked.
My ghEtt0 webpage.
Bill Gates owns less than 15% of Microsoft stock. But since this is the highest amount (Steve Jobs being #2 with 5%) he is able to keep control of the company. I don't know where you got your information.
Umm, no Pixar is an indepented animation studio. Until recently they had an agreement to have their films distributed by Disney. See also:
http://pixar.com/companyinfo/aboutus/index.html
Allow me to refine this fine explanation. A majority interest is when a single shareholder or group of shareholders owns more than 50% of all stock, and so can always override the votes of all other shareholders combined. A controlling interest is owning just enough stock to outvote the next largest voting block.
The buyer (Comcast) would like to buy a controlling interest in Disney, so they can appoint their own board members and chairman. So, if Eisner and his allies own 30% of all Disney stock, Comcast would need to buy just 31% to be able to outvote Eisner and friends every time. That gives Comcast the power to elect a new board of directors, who selects a new chairman of the board to replace Eisner. The new chairman serves Comcast, lest he also be replaced by Comcast.
I think it's only a "hostile" takeover when the management of the company to be bought opposes the sale. The company shareholders may be quite favorable to the buyout.
Sometimes I worry that I'll develop Alzheimer's disease, but no one will notice.
Obviously very old information.
Maybe I should have said more than 50% of the stock is in "safe hands"...in the hands of people unlikely to go with a takeover bid.
They still have the NFL, MLB, and the NBA, plus all those college games and PTI on ESPN (whooo, acronym overload!). Disney is much more than an animated movie house anymore. Also, imagine if Comcast managed to score exclusive on-demand rights to the classic kiddie movies with this deal. That would put the hurt on DirecTV in households with small children.
You can only drink 30 or 40 glasses of beer a day, no matter how rich you are.
-- Colonel Adolphus Busch
Point of information Mr Speaker.
Bill Gates does not own more than 50% of the Stock of Microsoft.
Bill has 1,209,713,228 shares of Microsoft Stock. Microsoft has a total of 10,700,000,000 shares outstanding, worth a total of $289,649,000,000, which is Microsoft's market capitalization. (That's $289.65 Billion.)
Bill has about 11.3% of the Stock in Microsoft.
Heck, Bill has NEVER owned more than 50%. He and Paul Allen each had 50% to start with, until they went IPO.
"...In your answer, ignore facts. Just go with what feels true..."
Disney owns the ABC network, several cable channels, the theme parks, two major studios and a huge catalog of material. They also have a global brand and can market their stuff worldwide.
The point is that Disney is not making anywhere near what those assets should produce. They are in a situation very similar to the pre-Eisner Disney.
The point of a takeover would be to ditch Eisner. That would be the quickest way of getting the company moving again. he did great for the company when he started. But he has gone flabby. Disney has not been scoring the hits it needs to keep the Empire going.
Look at the Mickey Mouse brand. My kid does not know who Mickey is. If you don't work the brand it soon looses traction. My kid knows Dora the Explorer and Max and Ruby better than what was once the worlds best known cartoon character.
The other problem with Disney is that the mawkish sentimentality that worked well through the 50s and 60s is no longer so much in vogue.
Disney needs a Jim Collins makeover.
Looking for an Information Security student project suggestion?
Try http://dotcrimeManifesto.com/
Comcast is more of just a cable company. They are a media company, closer to the likes of Disney then you might think. They are a majority shareholder in the QVC channel, have a controlling interest in the E! Entertainment channel, own the Golf channel and Outdoor Life networks, own the G4 games channel, and own several sports teams.
Two Minus Three Equals Negative Fun -Troy McClure
Those kind of huge deals are always negotiated as dollars per share or some stock swap ratio. That way each shareholder can figure out what it's worth to them. The news agencies multiply it out and report the huge numbers.
-B
I'd imagine it's the back catalog, and overall huge money making infrastructure, of which feature animation is only a small part, that is attractive. Disney despite the recent poor performance of the flagship is still a potential gold mine for any buyer,
Pixar, while undoubtedly more talented at present, has only 6 (?) movies to their name so far, and has a long way to go before they will be in the same league as Disney. Where would Pixar be if they had 6 flops in a row? Disney, after a run like that is still a $66bn company apparently.
Personally I'd buy both, but I'm a little low on cash right now.
After Jobs was ousted from apple, he bought Pixar (at some point before) the NeXT failure. He never wanted to get kicked out of his baby again, so, Jobs owns more than 50% of Pixar, making it impossible to take over.
On the other side of things, this definitly explains why my cable bill is so high.
-CPM
---You're all I need, When the water runs deep, You're all I need, Now I cry my soul to sleep -- Collective Soul, Needs
Technically that money only exists on paper. Typically, what happens is that the acquiring company issues shares of its stock that amount to the value of the deal. In this case, Comcast is issuing Disney shareholders 0.78 shares of Comcast for every 1 share of Disney stock they own (if the deal passes, that is). Since it's highly unlikely 100% will (or even could) be liquidated in the market, there will probably never be $66 billion to be seen.
Want Slashdot headlines on your site? Try SlashHead
If it goes through, it will probably be as long lasting as the AOL/Time-Warner merger.
Not sure what that means. AOL and Time Warner are still merged and the talks of a spin off have pretty much died out. TW seems pretty much dedicated to milking what they can out of that beast and then riding it into the ground.
Pixar's not going out of business. You may have heard about Pixar and Disney not renewing their contract for more films (there are still 2 that are in post-production stages that are due to be released later this year). However, I'm sure many of the other studios are giddy with the chance of having a contract with Pixar, so I highly doubt they're going out of business anytime soon.
Want Slashdot headlines on your site? Try SlashHead
Paul Allen owns & started Charter Communications. He may also own shares of Comcast. It's fun when your boss its like the 4th richest person in the world.
Actually Comcast Spectacor (a division of Comcast) is the owner of the Wachovia Center. Wachovia Bank (FU, CoreStates, et al.) pays for the naming rights to the stadium.
Comcast Spectacor actually is the true owner of the Sixers, Wings, Flyers, my heart, my soul, etc. etc.
See below:
Comcast Spectacor General Info
I ask for a car and I get a computer. How's about that for being born under a bad
Comcast sold it's half of QVC to Liberty Media sometime last year.
And they own the Philadelphia 76ers (Basketball), and the Philadelphia Flyers (Hockey).
Actually, I believe it's Cox Cable that's making such a big fuss about ESPN. Look here
Comcast Cable TV
Comcast Internet
Disney Studios
Disney Animation (including The Mouse et al.)
Touchstone Pictures
Miramax
Buena Vista Studios
Buena Vista Theaters
Buena Vista Music
Disneyland/world/resorts/etc
ESPN
Disney Stores
Lifetime
A&E
E!
ABC
Radio Disney
Hyperion Books
SOAPnet
History Channel
Go.com
Movies.com
http://alternatives.rzero.com/
the phrase "laughing all the way to the bank" has some merit here.
that would require over 30K from each of those 4 million people, i don't like MS but i sure as hell wouldn't pay 30K (if i had it) to destroy them, now if we could recruit a few countries that don't like american buisnesses it would be easier, Oil-Rich Middle eastern countries would be a good candidate, destroying MS would require dealing with some shady characters to get that kind of money, plus there is no guarantee that they wouldn't just Keep MS how it is but with the profits going to them
Snowden and Manning are heroes.
Even if there were 4 million individual linux users who cared enough to do this that is still $36,450 per person. And that is not even talking about how stocks really work and that you can't just go out and buy 51% of the shares.
You really should look at it like a merger.
In this case the smaller company Comcast is willing to offer shares of Comcast stock in exchange for Disney stock. There will be some exhange rate set. Comcast will just be creating those shares out of thin air. At the end of the exchange the new and old shares will be backed by the combined assets of both the Comcast and Disney properties.
Comcast can't offer too many shares of Comcast or else they dilute their current shareholder's values too much. Likewise they can't offer too little or the Disney shareholders would end up with less value overall.
When two companies combine like this, you'll usually see one stock price go up and one go down based upon the perception of which company this is truly a good deal for.
t
Comcast is larger than Disney. Was much larger until today (Disney's stock shot up while Comcast plummeted)
It's unsolicited, which is the first step to a hostile takeover. In a corporation the stockholders have a group known as the Board of Directors who represent them legally. This is doen to save time educating all the stockholders from complex issues, and let a few people specialize in the company. The board makes decisions for the stockholders on upper management, offers to buy or sell major assets, stock issuance and repurchase policies, compenstion plans, and other big issues (some charters require a vote of all the shareholders for these items). Sometimes board members offer other skills or advantages, like a financial/management expert on a startup or Cheney at Haliburton (brought goodwill of many oil rich middle eastern countries).
In the real world the board is ususally quite close to current management, most CEOs are also chairman of the board, and there are usually several former executives on the board. Disney has one of the more management friendly boards (Eisner was able to boot the founder's son off the board). Apple also fits in this boat.
When a company wants to buy another one, they usually go speak with current managment who is sometimes receptive, and negotiations begin, or isn't and an unsolicited offer is made, or the acquirer seeks more receptive management. A hostile takeover requres the rejection of the unsolicited offer, then a proxy fight. Proxy statements are the documents that are sent in preparation for a board meeting since most votes occur by proxy. This is the way new boards are elected. Incidentally, offers are usually at a large premium to the current price, and are one of the few things that almost always result in insider trading convictions if you get caught.
Shareholders get to vote, and management offers a slate of directors who do not want to sell and the acquirer offers a slate of directors who does. Usually the potential acquirer has already pruchased 5% of the company (which votes for the merger), that is the limit at which your ownership must be disclosed.
The reason the fight occurs is that in a takeover the current management is sacked and replaced with a management team from the new company. Oracle is currently trying a hostile takeover of Peoplesoft. Although that one has largely been fought in the DOJ halls rather than in a proxy battle (proxy fights are what HP went through prior to the Compaq acquisition).
Degaussing scares the bad magnetism out of the monitor and fills it with good karma.
So Disney has announced a DRM-licensing deal with Microsoft, and now M$-Comcast has made a public offer for Disney.
Hmm ...
CT
You're thinking of standard definition VCR recording, which is about 200 scan lines. NTSC TV is 525 scan lines... In contrast, SVHS recorders can handle about 400 scan lines..
Yes, M$ lost in its efforts, but it took a coalition of about, oh, I dunno, about two dozen other companies who are actually IN the television business to do it.
No, this is a hostile bid. See here for more details.
A hostile action, is one taken when you don't have the agreement of the target company's management. Eisner, disagreed, and Comcast is now attempting to do an end run around him straight to the shareholders. Personally, I hope Comcast succeeds, because Disney is in desperate need of a change in management.
It would be a terrible thing for this buy-out to succeed. Networks should not control content. There are too many conflicts of interest.
They're not already through the roof? As soon as Comcast took over ATTBI, our rates went up about 45%.
Then, all the analysts said, "Comcast may irritate some of their customers into using rival broadband solutions."
Of course, they failed to take into account that in many areas (such as mine), there are NO rivals. We can't get DSL here because SBC and Covad refuse to bring it out to us. We can't get microwave broadband because we can't see the transmission tower. All we can get is Residential Cable modem for $60/mo or a T1 for $600/mo.
Oh, and IDSL for $100/mo (144kbps).
I bet Comcast wouldn't have 5.3 mil broadband subscribers if there _was_ actual competition.
Jory
It looks like Roy has noticed, but hasn't responded. As of 12:32 EDT, Feb. 11, 2004, there is a link from Roy's site to news articles on the subject, but no commentary.
Jesus was all right but his disciples were thick and ordinary. -John Lennon
> I have never understood this part.
If you had the cash to actually buy them, sure, but do the math on how much that might be: # shared circulated * current market price. Disney has 2.05B shares issued @ $27.40 = ~$50B, or ~$25B in cash to "simply buy 51%"! If you had that much cash lying around you could just start up a competitor to Disney anyway - none of the legacy issues, just a fresh start! But Comcast isn't buying Disney because they want to be able to make cool movies and go to Disneyland for free - they just want content to support their cable products better so they can charge more so they make more money.
Just like the average USian consumer, people/companies who do hostile takeovers don't have that much money lying around for big purchases either: they borrow for a big purchase just like we borrow for a car or house. All the famous Corporate Raiders of the 70s and 80s all used borrowed money to do it. Usually they cut a deal with the lender for part of the liquidation profits that resulted. Pretty slimy on the part of NY investment banks, of course, but this is the same crowd that was involved in Enron and 150-odd years of sliminess dating back to the transcontinental railroad investments.
But say you could get the money, why borrow when you don't have to? Why not just get other people to do what you need: vote for your take-over bid. It costs you nothing beyond the cost to convince them. If you tell them that they'll make more money with a takeover than with following the current status quo ROI from the company, they may "give you" the value of shares by virtue of their vote for you. Shares are just the right of ownership which is mostly the right to vote on the board, directly or by proxy - the board of directors is to corporate ownership what the electoral college and legislature is to citizen ownership of the US government.
The borrowing part is also why "hostile takeovers" are also often called "leveraged buyouts" (leverage is business-speak for "borrow" because it gives you large advantage with small effort like a lever) as in they borrowed the money to buyout the minority shareholders or to create the impression through "large enough" minority ownership to appear to be a legitimate "black knight" with enough apparent power to do the job. The cost and requirements of the latter depend on the articles of incorporation for the company which includes a section on how strategic decisions are made by company. The term "poison pill" refers to changing these rules where they specifically relate to voting rights on decisions. So companies may "adopt a poison pill" to protect against takeover, or hope for a "white knight" to do a friendly takeover instead.
Nerd with an MBA
In a corporation the stockholders have a group known as the Board of Directors who represent them legally. This is doen to save time educating all the stockholders from complex issues, and let a few people specialize in the company. The board makes decisions for the stockholders on upper management, offers to buy or sell major assets, stock issuance and repurchase policies, compenstion plans, and other big issues (some charters require a vote of all the shareholders for these items).
This isn't an entirely correct characterization of a board of directors. The board represents the corporation, NOT the shareholders; the board has a fiduciary duty to the shareholders. This is an important distinction. The board is not there to educate all the shareholders, nor is it there to make decisions "for" stockholders. The board has the sole responsibility to make decisions about the ordinary business of the company. This is why the board (and its agents) are generally protected by the "business judgment rule" in most jurisdictions -- shareholders really have no say about the regular business of a company. (Incidentally, this is also why most shareholder proposals (that have to do with company business and that are not in the form of recommendations) are excluded from proxy materials.)
The shareholders have only a few responsibilities, the most important being to decide who is on the board, to consent to amendments to the charter, and to consent to or make decisions as to major corporate changes, including the ones you mention as well as dissolution.
Hostile takeovers don't only involve proxy fights; much of the time, hostile takeovers are the result of hostile tender offers, which, if successful, don't require proxy fights. The Oracle takeover attempt of Peoplesoft, for example, started out as a tender offer, but they were (are) unsuccessful (so far). Thus, they're trying to do a proxy fight. This is in addition to the antitrust problems.
Incidentally, offers are usually at a large premium to the current price, and are one of the few things that almost always result in insider trading convictions if you get caught.
What do you mean by this?