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Last Updated: Wednesday, 11 February, 2004, 17:29 GMT
Comcast launches bid for Disney
Monsters Inc
Should the Disney board be scared?
Disney is the target of a hostile takeover approach from Comcast, the largest US cable-television operator.

Comcast has revealed that it has made an initial informal offer to purchase the iconic movie to theme park group for a deal worth $66bn (35bn).

A union between the two companies would create the world's biggest media firm.

But while Disney said its board would evaluate the offer, Comcast said Disney chief executive Michael Eisner was "unwilling" to enter merger talks.


Comcast said it will now return with a formal - and inevitably higher - bid.

Its initial offer involved $54.1bn in stock, and the taking on of $11.9bn of Disney debt.

The offer puts a lot of pressure on Disney boss Eisner to perform if he turns this deal down".
Analyst Angela Kohler

This is a 9.9% premium on Disney's Tuesday close share price.

Analysts said Comcast, which until now has specialised in distributing other people's television shows and networks, wants to get its hands on Disney's vast portfolio, which includes ABC television, ESPN and other cable stations, and the Disney and Miramax movie studios.

Its hostile bid comes at probably the worst possible time for embattled Mr Eisner.

Computerised cartoons

The Disney boss has been facing strong shareholder criticism for failing to renew the company's phenomenally lucrative distribution deal with computer animation experts Pixar.

Brian Roberts, president and chief executive of Comcast
Brian Roberts said he had wanted friendly merger talks.

Pixar's films for Disney, such as Toy Story and Monsters Inc, have made more than $2.5bn at the box office since 1995, but the two companies ended their partnership last week after failing to come to agreement on how to split future revenues.

The failure on Disney's part to continue its relationship with Pixar has led to former Disney directors Roy Disney and Stanley Gold lobbying shareholders to oust Mr Eisner, saying he mismanaged the company.

The BBC's Kate Noble said Disney's current difficulties may have prompted Comcast's takeover approach.

"What Comcast is saying is that Disney has let a number of their businesses fall away, and that they could do it better," she told the BBC's World Business Report.

If Mr Eisner does wish to see off the Comcast approach, it will put even more pressure on him to ensure Disney's future profitability.

His fight back appeared to start immediately however, with Disney responded to the takeover bid by releasing successful first quarter results several hours ahead of schedule.

Future performance

Its profit for the quarter to December 31 jumped to $688m, from the $36m for the same period in 2002.

Serves more than 21m customers
Operates in 41 US states
Employs 59,000
Source: Comcast
Revenue was unsurprisingly also up, climbing 19% to $8.5bn.

Angela Kohler, an analyst at US firm Federated Investment Management, said a merger would make a lot of sense for Comcast.

She added that the offer "puts a lot of pressure on Eisner to perform if he turns this deal down".

Comcast chief executive Brian Roberts said in an open letter to Mr Eisner that it was "unfortunate" the Disney chief had rejected friendly merger talks.

"Given this, the only way for us to proceed is to make a public proposal directly to you and your board," Roberts said.

Disney said its board would evaluate the offer, but told its shareholders to take no action in the meantime.

The company's shareprice closed up 14% on the takeover news.

Jessica Cohen, an analyst at Merrill Lynch, called the proposed merger a "perfect, brilliant combination".

The BBC's Kate Noble
"Comcast has grown tenfold since it's ambitious chief executive... took charge"

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