From the Associated Press

Walt Disney to Study Comcast Merger Offer
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By SKIP WOLLENBERG
AP Business Writer
February 11, 2004, 11:53 AM CST
NEW YORK -- In a stunning move, cable TV giant Comcast Corp. proposed Wednesday to buy Walt Disney Co. for stock valued at about $54 billion. The Disney board said it would study the offer, which would create the world's largest communications company.
Comcast, the nation's biggest cable systems operator, said Disney chief Michael Eisner had rebuffed its request to talk earlier this week.
Comcast's proposal was made as Eisner is fending off criticism from former board members Roy E. Disney, nephew of founder Walt Disney, and Stanley E. Gold about his performance and lack of a succession plan as Disney's chief executive. Michael Citrick, spokesman for Disney and Gold, declined to comment on Comcast's proposal.
"This is a very exciting moment," Comcast chief executive Brian Roberts said in a conference call with investors and analysts. Roberts said the combination "would create one of the world's premier entertainment and communications companies, and, we believe, restore the Disney brand to prominence and the company to growth."
"The ball's in Disney's court," Roberts said.
Disney's board of directors released a statement later Wednesday saying it had received Comcast's offer and would "carefully evaluate" it. "In the meantime, there is no action for shareholders to take," the directors said.
Disney, which owns ABC and ESPN, and Comcast, whose businesses include the Philadelphia Flyers hockey team, together had $45 billion in revenues last year. Time Warner Inc.'s $39.6 billion in revenues last year made it the world's largest media and communications company.
In a news conference in New York, Roberts said he hoped to make the deal "as friendly and amicable as possible, as fast as possible," but he also noted that he was ready to abandon the proposed merger if need be. "We've walked away from big things before. Life goes on," Roberts said.
Paul Kim, senior media analyst at Tradition Asiel Securities, said that while Roberts' bid for Disney was not surprising, the timing was.
"It's going for the jugular," he said. "He is using this vulnerable time to force Disney's hand."
Kim also said Comcast is basically a cable company, and might be biting off more than it can chew. "I think they underestimate the complexity of being a broad-based media company," he said.
Comcast released a letter sent to Eisner indicating that Eisner had personally rejected Roberts' offer to enter into merger discussions earlier in the week. Roberts' letter called Eisner's refusal "unfortunate."
"Given this, the only way for us to proceed is to make a public proposal directly to you and your board," the letter stated.
On Comcast's conference call, Steve Burke, head of the company's cable division, told investors that Comcast believed it could greatly improve the performance of several of Disney's key businesses, including ABC, the ABC Family channel, animation and theme parks.
"We think job one is restoring the company to its previous levels of profitability," said Burke, who had worked at Disney for 12 years.
Under the merger, Comcast said it would issue 0.78 of a share of its Class A stock for each Disney share, and Disney shareholders would retain 42 percent of the combined company.
The deal values each Disney share at $26.49, a 10 percent premium over their closing price Tuesday.
In a sign that investors expect a nasty fight, Disney's shares shot up $3.36, or 14 percent, to $27.44 in heavy midmorning trading on the New York Stock Exchange, well above Comcast's current offer. Comcast's Class A shares tumbled $3.14, or 9 percent, to $30.79 on the Nasdaq Stock Market.
Philadelphia-based Comcast merged with AT&T Broadband in November 2002, making it the nation's largest cable TV company with 21 million subscribers. The company noted that merger in its sales pitch Wednesday.
"Our management team has a proven track record of successful integration of our merger partners," Roberts said.
Comcast also has extensive holdings in media content providers, with majority stakes in Comcast-Spectacor, the owner of the Philadelphia Flyers and 76ers; Comcast SportsNet; E! Entertainment Television; the Style Network; Golf Channel; Outdoor Life Network; and G4.
Separately, Comcast reported Wednesday that it swung to a profit of $383 million, or 17 cents per share, for the quarter ending Dec. 31 thanks to continued strong demand for its digital cable and high-speed Internet services. Revenues jumped 58 percent to $4.74 billion.
Last year, Roy Disney, the last Disney family member active in the company that his father and uncle founded in the 1920s, and Gold had called on Eisner to resign, saying he was to blame for a tumbling stock price, embarrassing management missteps and a focus on short-term profits over the company's core mission.
But others credit Eisner with turning a sleepy theme park company and also-ran movie studio into a major media conglomerate.
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On the Net:
http://www.comcast.com
http://www.disney.com
Copyright (c) 2004, The Associated Press