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?"

Comments

More money and less Eisner

[erick99]

Disney clearly wants a better financial package. That is what they mean by " '...carefully consider any legitimate proposal..."

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

Re:More money and less Eisner

[afidel]

What I don't understand is why all the talk about percieved value and expected selling prices for institutional investors. If Disney is worth more than its current street price to these institutional investors then why hasn't the stock actually reached that valuation? Is Disney worth more in the hands of some other company than as an independant entity? I mean if the information in the system is that Disney is worth $35 then that should be the price of the stock, if the investors are saying they won't sell unless they make a certain profit and they do not expect other bidders then the people invested in their funds should throw them out because any profit is better than no profit.

Re:More money and less Eisner

[ffsnjb]

That would be the problem with the stock market. Stock price rarely ever indicates true market value of a company. Stock price is determined by one thing and one thing only: emotion of traders. If stock price was actually an indicator of value, it'd wouldn't change on the whims of investors and how they feel on a given day.

Disney is about culture--comcast isn't

[Riomaggio]

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).

Re:Disney is about culture--comcast isn't

[LostCluster]

Wait a second. The Walt Disney brand has a ton of goodwill associated with it, but I'm not quite sure that the company that trades under the DIS ticker symbol can say the same. Afterall, it's responsible for Miramax and Touchstone pictures. The Disney brand can't put out an R-rated movie, but the Disney company certainly has ways to do so. The Disney culture certainly doesn't run through the ABC TV division of the company. ABC is all over the map when it comes to what kind of content it will distribute, like a good broadcast TV network should be.

So, when it comes down to it, what people think of when they hear the word "Disney" is only a part of the overall company at this point. Disney may have aquired so much under Eisner that it's having a hard time controling itself. I'm not sure Comcast can do much of a better job, but I'm sure they want to try...

Just because Gates has an interest in Comcast...

[i)ave]

... 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.

Disney:the 800lb gorilla that can't hold a pencil?

[newdamage]

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.

Re:Resistance is futile

[Wavicle]

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 believe his hobby is "swimming in pool of money filled by severance package."

Re:This is good

[Anonymous Coward]

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.

Re:For background information

[One Louder]

"Wall Street" was about the takeover market of the 1980's, and doesn't reflect the takeover environment of the 2000's.

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.