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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?"
Neither the camp that supports Eisner nor the camp that wants to depose Eisner and take over the company themselves is going to vote in favor of Comcast taking over. Finally, an issue the two groups can unite on!
My local paper (Philadelphia Daily News) ran a comparison recently between the two - in terms of revenue, Disney grossed 50% more than Comcast, which is less than I would have thought. Comcast has cable companies in 41 states, and the Disney op does not have substantially more personnel than Comcast. Doesn;t mean a hill of beans when you start crunching numbers, but it showed me that Comcast has more muscle than I thought they did, and that the second round might be the one if they can cough up some more cash.
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A) They like the amount Comcast offered, but don't think Comcast has the realistic ability to scrape together that kind of bread
B) They want to fan the flames a little to see who else wants to pony up for a ride on the You bid, they bid, we get back to you, then let's repeat.. train. Considering what's going on between Cingular and Vodaphone over ATT Wireless right now, I can't say I'd be surprised if that's their motivation.
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I just watched Wall Street with Mike Douglas and Charlie Sheen and I finally have a clear idea of what these takeovers are about and how they are executed.
Basically, the target has some sort of attractive feature which can be achieved by the clever cutting off of unnecessary features. The entity that is attempting to take over the target is trying to get enough control over it that it can dictate the elimination of those unnecessary features. Typically the top tier of management of the target is completely replaced by the takeover entity's management appointments.
Takeover's aren't attempted because of any altruistic motive on the entity's part. Comcast wasn't interested in making Disney a stronger company, only to milk the Disney company of it's properties and eventually spin it off once it becomes unprofitable again.
As much as I hate the Mouse, I have to applaud them for sticking up for themselves and successfully resisting this hostile takeover.
I have been pwned because my
Microsoft invested $1 billion in Comcast back in 1997 and owns quite a bit of Comcast.
When Mike Jitlov worked for Disney doing special effects, he found their culture so regimented and stiff that he started calling it "Mauswitz." This started to catch on, but the PHB's made it a firing offense. He then changed it to "Duckau," which was, oddly enough, acceptable.
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If comcast were smart they would have bought up a lot of Disney shares quitly for a couple months and then made the announcement. Since investors bought Disney stocks pushing the price higher there would have been a nice little profit in selling off those stocks. Then, even if the trade doesn't go through you got money out of the deal. Now repeat this same thing a couple times per year and you either grow your company by buying the company or at least unloading thier stocks after announcing the buyout.
Disney's board of directors today turned down Comcast's hostile takeover bid,
I thought that hostile takeover meant that Comcast doesn't need Disney's board to accept anything.
LK
"Hi. This is my friend, Jack Shit, and you don't know him." - Lord Kano
Comcast was likely hoping that Disney investors on Wall Street would have signed off on the deal by selling their Disney stock and buying Comcast stock, which would have caused the ratios to slide in Comcast's favor. Instead, the reverse happened, Comcast went down and Disney went up, making Comcast's stock swap offer worth less and less as Friday went on.
The reason Comcast went "public" with the buyout information, is because Eisner privately turned down the bid.
The reason the board turned down the bid, is because they are getting bigger private offers (that we don't yet know about).
I, however, do know of one "major" media-up-and-coming-conglomorate that is making a bid. (Yes, they already have their own "mouse" [and protocol]).
MS-NBC-ATT-Viacom-Disney-Studios anyone?
Here's my prediction of the new MS-MPAA movie formula:
A love affair will acrue between a wholesome Microsoft user and a debaucherous Mac-using whore. He'll pretend that he cares about her and he'll drive her to the hotel room in his Microsoft-powered-Lotus-Espirit. He'll flaunt her around at big events, like [w]horse races, etc... and she'll realize that she's just a lowly MAC user! He'll undoubtedly comfort her by spending an incredible amount of money to convince her that Windows is better for sluts [that have some form of confidence].
Using cool special effects, she'll turn out to be an alien and the ATT-Disney Animation-Viacom-Studios fun will begin!
[I don't want to ruin the ending; but I'll bet you can guess who get fscked at the end of this flick]
Every day will seem like Independence Day!
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Actually, I hope this merger goes through. For one, it'll sink Comcast so far in debt that investing in Time Warner stock will be considered a good investment among media companies. Second, Comcast will quickly dump the "ABC" Family Channel. It does not fit into the Disney/ABC content at all and was a stupid purchase to begin with. Third, Comcast might chuck the Disney animation channel and merge it with Time Warner's Cartoon Network, similar to what happened with the Comedy Channel and Ha many years ago (thus becoming Comedy Central). Fourth, the FCC and FTC might step in and make Comcast shed some of its cable markets. Ode to get Time Warner Cable here in Sacramento instead of Comcast. To think our city fathers passed on Warner/Amex Cable so many years ago because Warner didn't want to pay for our idiotic community access channel studios. To tell the truth, this cable market hasn't been good since AT&T Broadband got swallowed up in that monstrosity that is Comcast.
:)
If we had Time Warner Cable here, we'd probably have VoIP service through the cable company itself instead of through third-parties such as Vonage. We could have AOL or Earthlink as our "native" cable modem ISP instead of having to pay for email service through Comcast that probably none of us use (lets see, it was @home.com, then it was @attbi.com, and now its @comcast.net, great track record!). I also suspect my market would also have a greater emphasis on HDTV deployment and while it isn't TiVo, at least Time Warner Cable would offer some DVR options, unlike Comcast (and they even own a chunk of TiVo stock!).
So, for my very own selfish local reasons, I hope this convoluted merger goes through! May Comcast harvest the energy derived from the synergy of the AOL Time Warner merger!
"Right now, somewhere in this world, Scott Baio is plowing a woman he doesn't love," - Peter Griffin, *Family Guy*
I'm willing to bet Jobs will join forces with Comcast to take back Disney from M.E. or Fox News said today Pixar could get the money to do buyout of Disney. Either way Eisner is on his way out.
I've been a shareholder in DIS since the 1970's and have weathered other potential takeover storms.
The reason this one is different from the one 20 years ago is that I think the potential buyer has in mind the protection of the longterm value of the Disney brand and its associated assets. This brings benefit to shareholders beyond any premium in share price that might be offered. (If you don't know, many shareholders are somewhat concerned that the current Disney management team is focusing more on short-term profits than long-term value ... and if you need a lesson as to why that's not the best approach, I'm guessing you're not an ex-dot-com'er.)
In the case of the animation business which has arguably languished lately (closure of animation facility in Florida for example; also a focus on computer rather than hand animation), Comcast seems interested in bringing it to the forefront again. Whether that be through further investment on their part, or selling it off to a creative company like Pixar which could make the most of it, I can only see positive results compared to what's been going on recently here.
In the case of the theme parks, which have experienced reduced maintenance budgets and a serious slowdown in the number of new "big ticket" attractions developed in the past 5 years or so, again I can only see that a change would bring better stewardship of key company assets. Even if it meant selling off or leasing for operation the parks to a company like Six Flags, asking myself if "will the standard for the parks as it currently exists be lowered or raised?", my gut reaction is that it will at worst stay the same.
Anyway, usual caveats here -- not speaking on behalf of ANYONE except myself, and yes, I'm a stockholder in DIS who's in it for the long haul
Between Comcast's attempted hostile takeover and Eisner's complete alienation of most of the core historical Disney management team, I reluctantly decided to dump all the Disney stock I had and take advantage of the inflated stock price. Eisner may have been able to help Disney over some rough times, but his style and approach is not good for Disney in the long term. Consequently, Comcast having majority ownership in the company would be an even greater disaster. This all signals to me that Disney is in for a dark period.
Do I think you're insightful merely because I agree with you, and was preparing a similar comment? Maybe.
The 'Economist' has forgotten some bits of economic theory in favor of financial instruments. Plain and simple. A price expresses value only at the time of a transaction. There are millions of transactions of Disney stock on a daily basis that show, as of today, that the Economist article, no matter what formulae they use, is wrong.
Jesus was all right but his disciples were thick and ordinary. -John Lennon
If Comcast goes back up, and Disney goes back down, then the offer may indeed be considered again. Remember, Comcast is an entertainment giant, and they can stick ads in every single one of their paper bills. This could get more people going to Disney theme parks, Disney films, Disney everything, for the same price that Comcast currently mails its paper bills to customers.
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You and me both man. Computer geeks seem to suffer from specialist disease. The tighter the specialization, the more belief that they have insight into things that they never bothered to learn anything about. After all, business should be trivial to anyone who has learned the arcana of the Win32 API or perl - right?
Pardon me, but Disney IS a large corporation. And, has done quite a bit of swallowing itself.
Let's go back to the "Love Bug" and "Apple Dumpling Gang" days, please
Political correctness is the newest form of slavery.
What you say is very true. However, unless Disney has offered new stock since news of the bid attempt, someone has to be selling those stocks that others are trying to snatch up in that drive for a stock looking to go up.
I'm not trying to contradict you. I'm merely looking more at the next to last paragraph, specifically the "unless you believe the buyer won't complete the purchase and the intrinsic value of the company is less than the offer" part of it.
I'm wondering who believes that Disney is worth less than the value Comcast had bid.
I'm not a nerd. I'm a geek. Nerds make more money.