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Disney Board Turns Down Comcast Takeover Bid
scifience writes "Disney's board of directors today turned down Comcast's hostile takeover bid, reports MSNBC. The board expressed confidence in Eisner's leadership. One interesting quote released by the board is that they will, '...carefully consider any legitimate proposal...' Does this mean that they did not believe Comcast's offer to be legitimate?"
Further, I do not believe that they are terribly crazy about Eisner anymore even though they throw him a bone (for now) when they say "(The board) has confidence in the business, financial and creative direction of Disney under the leadership of Michael Eisner and his management team." They will gladly jettison Eisner when they have a "...legitimate proposal."
Happy Trails!
Erick
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When Comcast asks Gates to start waving money under their shareholders noses, Eisner will be out on his ass before you can say "Takeover". Disney can do this the hard way or the easy way, but in the end, everyone has their price. I hope Eisner developed some hobbies outside of Disney, cause the target on his back is a mile wide, and just a few bucks short.
I thought they did consider it... just because they rejected it doesn't mean they didn't consider it, right?
It was already clear that the board of directors wasn't going to like this deal. That's why Comcast went public with their offer, to try to sway the individual shareholders to elect Comcast-takeover-friendly executives and try to take over the board.
Good luck, Comcast. I think you'll need it...
The directors of a company have a legal obligation to consider the shareholders of their company. So they will always '...carefully consider any legitimate proposal...' whether they like the sound of it or not. In fact it is hard for the directors to recommend against a sufficiently high offer.
Read Epic the first RPG novel.
Does this mean that they did not believe Comcast's offer to be legitimate?
Sure, if you take it at face value. The reason Comcast's offer wasn't "legitimate" was because it was not Disney's idea to begin with. Disney's shareholders and officeholders will receive a much better deal in an acquisition where every decision-making individual involved can be sure that he will receive his fair share of the loot that flies up in the air and is up for grabs in these situations. That wasn't the case here, where basically Comcast caught Disney off guard, with their lawyers sleeping.
This is by no means the end of merger-talk between Comcast and Disney. It is the dream of every entertainment conglomerate to someday fuse with every other entertainment conglomerate in existence, and neither Disney nor Comcast can be expected to ignore all that "synergy". Stunts like this are part of the mating ritual. This is the first part of a long mating dance that ends in a new corporate logo, a new round of strange commercials repeating a weird logo that makes no sense, and several thousand layoffs.
The board didn't go with the Comcast offer just because Comcast's bid pushed Disney's share price up. I'm pretty sure that the board will sing a different tune about Eisner once they receive high enough bid.
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The general public usually forgets that the best mergers are not just about money (and stock price) they are also about synergies. The potential merger with Comcast brought some synergies to the table (an outlet for Disney programming and cheaper advertising space). But ultimately, the key synergy is missing: Disney's focus on family entertainment.
To the external public, Disney is the ultimate family company. The ability for Disney to remain a reconginized name in family entertainment is crucial to its continued success. What does Comcast bring to that image? A merger could potentially dilute the image that Disney has worked decades to develop. (In accounting terms: Disney has a LOT of Goowill).
What's ironic about all of this is that Disney's external image and internal culture are so different. Many former employees have complained about it being a glue factory (i.e. hire people and use them up). Benefits, especially family benefits, are not as competitive as other companies in the industry. And most importantly--Disney no longer creates most of its content--almost all of it is outsourced to other organizations (i.e. Pixar) or just re-telling of old Disney stories (Cinderella, etc).
... doesn't mean he's going to spend a limitless amount of money for Disney, or that he even seriously wants Disney. For all we know, he told the board exactly how much they could bid for Disney before he gets pissed and votes his 7% against the whole proposal.
-- I'd give my right arm to be ambidextrous
Har Har.
Anyway, anyone else draw the AOL-TimeWarner versus Comcast-Disney comparison? Whats with internet companies thinking that media companies are a good match for them?
Where is Disney's next big movie going to come from? They've closed down their Florida studio.
They've lost pixar, and now they're getting in the news not for making animation but for corporate maneuvering.
Luckily for us at least we still have quality animation coming out of Japan, the rare gems coming from Warner Bros. (i.e. The Iron Giant) and the occasional Dreamworks film.
Quite personally I'd like to see Disney's slide be used as an opportuntiy for more adult themed animation to break into mainstream US culture, and with the success of spirited away, it's possible.
ce n'est pas un Sig.
A) They like the amount Comcast offered, but don't think Comcast has the realistic ability to scrape together that kind of bread
Comcast offered a stock-swap... and as soon as they announced that their stock price dropped. Worse yet, Disney's price rose. Oops. As a result, the cash value of the deal fell, and Comcast's offer seemed even less attractive than it was when the day started. Needless to say, Wall Street disapproved of this deal and didn't want it to happen.
If anything, Comcast is going to pay yet more money for Disney, thus potentially edging them closer to bankruptcy :) Thats is - if things don't work out. They could, and this would be a successful venture (Indeed, Merril Lynch essentially called it a match made in heaven). If not, say hello to AOL Time Warner Episode II.
For what it's worth, I think this deal is a disaster in the making; One of the most important parts of an acquisition, takeover, or merger is how to incorporate the cultures of the two companies involved.
Disney has a history of independence and a strong, distinctive, and unique culture. Thanks to Michael Eisner, Disney is no longer a theme park company with a little studio; it's mostly a content company. And in terms of content, it's the <I>people</I> who count; that's what Comcast is buying (Besides the hard assets in terms of channels, magazines, parks, etc.) - And hell, even the parks are truly driven by employees who are obsessed with bringing the world's happiest place to each and every person who walks through its gates.
So, can Comcast, a company with no track record of any "creativity" in the traditional sense of the word...
(1) Buy Disney against the wishes of its management, and
(2) Shake things up like they've promised, and
(3) Tell people who've done a job for a very long time what to do different, while
(4) Keeping good relations with the bulk of their creative executives and rank-and-file employees?
I don't think so.
If you think about it:
1) Disney recently released favorable results at their analysts meeting. This alone may be reason for the Disney board to believe they are worth more than Comcast's offer.
2) No doubt, it's all about power and control. Eisner has been well known for squashing dissent. I'm sure he won't want to go without a fight. Comcast, I'm sure, mainly wants to get a foothold in the media business, so they can better compete with media/cable conglomerates like Time-Warner.
3) I wonder if Roy Disney and Stanley Gold had anything to do with this takeover bid. For one thing, the timing is a bit interesting, and I'm sure Roy Disney would probably jump at the opportunity to try to help restore family control of Disney.
All this being said, I somehow don't think this merger will go any better than a lot of mergers that have happened lately, e.g., AOL-Time-Warner, or DiamlerChrysler.
I think you can safely rule out any more attempts at creativity from Warners - they laid most of their feature animation division off after Osmosis Jones, sold off their furniture, etc. Besides, Brad Bird, director of The Iron Giant, is at Pixar now.
Who did the animation for that latest, forgettable Looney Tunes/Live action feature? I believe a lot of that work was outsourced, just as they did in Space Jam...
I havn't seen anyboby comment that Comcast is big into porn and why that might be a reason Disney doesn't want to be swallowed up by them. Just a thought.
On the other hand Disney does do porn with the ass shots/nudity on NYPD Blue or the R rated movies made by the various movie production companies they own.
While Comcast delivers internet service to a lot of people, they are not an "internet company" per se. In the theoretical realm, Comcast is a better match for Disney than AOL for TW because Comcast already specializes in delivering exactly the content that Disney produces - movies and television. Whether they're a good match in the real world is a far more complex, nuts-and-bolts question that I'm not equipped to answer.
Traditionally a hostile bid would be inexcess of the stock value unless the stock was over valued and mired in debt. They were formally asking if the board would take a legitimate offer seriously in a public and open fashion. Disney's response was they would take a bid that benefited their shareholders very seriously. It's like a suitor asking coyly if he happened to propose marriage would the offer be accepted or rejected? The stock just upped the anty but I'd be surprised if they didn't respond with a bid that was $3 to $5 dollars a share over current value. Even if the stock jumped by that much in the meantime Disney might go for it since the increase was a short term reaction to the offer and would likely drop again in the coming months. It's very telling that they stated public interest. Eisner might want to pack a few boxes and load up on office supplies.
Back then it was common to leverage junk bonds to gain control over companies in order to break them up as you described - nowadays, they're typically misguided attempts at exploiting alledged business synergies, which never seem to actually materialize, AOL-Time Warner being the best recent example.
While it's true that Comcast's motives are certainly not altruistic (why would they be?), it's very unlikely they want to buy Disney in order to break it up and sell the pieces.
Blue horseshoe does not like The Walt Disney Company.
I don't think watching one hollywood movie from the 80s (starring that paragon of understated acting Michael Douglas, no less) can ever give you a clear (or even accurate) idea of how complex things like corporate mergers actually work. Hollywood isn't exactly known for letting facts and logic get in the way of a good story, rightfully so.
:-P
Thats how you end up with flash animations running on a Mac infecting alien motherships with a computer virus.
What you saw in that movie was a leveraged buyout: a small organization borrowing large amounts of capital to buy a much larger business. The debt is repaid by liquidating assets of the target. Comcast is not a small organization, and the offer that they tendered for Disney was a share swap, so there is no debt to repay and thus no need to liquidate. Not much at all like your movie example. (Not to say that Comcast wouldn't sell off parts of Disney if they did buy them. But it isn't a given, and if they did it would be for reasons other than what you saw in that movie.)
But then again some people think that they can learn Unix just by watching the girl in Jurassic Park.
Sounds like hell on Earth to me.
It's not thast they thought Comcast's bit wasn't legitimate, it's that it wasn't high enough.
Never eat more than you can lift -- Miss Piggy
First, if the purchase is through a stock offering, how would it put Comcast in debt?
Second, how would Disney Animation Network and Cartoon Network merge, since they wouldn't be owned by the same company? As you've said, CN is a TimeWarner company.
My favorite local gov't cable shenanigans is that my county finally started charging a local franchise fee. And rather than taking that money, they handed it over to Comcast!
Jesus was all right but his disciples were thick and ordinary. -John Lennon
"Besides who would go to Comcast World?"
Maybe the same people who go to 3Com Stadium, or Safeco Field, or Busch Seaworld, or...
Kip Hawley is an idiot.
Does this mean that they did not believe Comcast's offer to be legitimate?
Thats business speak. It just means it wasn't enough (big enough, good enough, whatever) not that it wasn't legitimate (given enought greenbacks almost anything becomes legitimate;-)).
Quack, quack.
The board "turned down" a hostile takeover bid? Isn't the whole idea of a hostile takeover that the current board doesn't want to go along with it? If the board agreed, then it would be more of an "amenable takeover" or something.
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Does this mean you didn't read the article which you yourself submitted (which explains perfectly out-of-context quote)
As a Disney stock owner, I'm personally glad that Disney did not agree to Comcast's hostile bid. Many analysts and regular shareholders alike (like myself) think that Disney's stock is already undervalued. If Disney had accepted this bid, they would have been accepting much less per share than what their (already undervalued) stock is currently trading for. I do not think that this is an issue about Roy Disney and Stanley gold being "right", I do not think it's an issue with Eisner being the "bad guy", I simply think that at the end of the day all that matters is money. Comcast simply didn't put enough of it on the table, and that is why Disney did not accept the bid.
I think he was complled to make the choice because of the failure of @home internet service. They were looking for a new customer base and Disney's 'innocent slate' was a good idea.
...don't question it!!!