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Eisner Under Fire

Comcast Calls For Talks on Disney Bid

March 04, 2004|Sallie Hofmeister | Times Staff Writer

Capitalizing on the growing pressure facing Walt Disney Co.'s board, Comcast Corp. on Wednesday called on Disney's independent directors to meet and discuss its proposal for acquiring the entertainment giant.

"In the wake of the shareholder vote, the Disney board has everything to gain and nothing to lose by sitting down and talking to us," said David Cohen, executive vice president of Comcast. "It would show they are trying to do something."

Some investors, however, viewed Comcast's overture as little more than a public-relations gambit to make the board look unresponsive in the face of shareholders' overwhelming vote of no confidence in Disney Chairman and Chief Executive Michael Eisner and the presiding director, George J. Mitchell.

The Disney board, after all, already has rejected Comcast's $50-billion takeover offer as too low, and it has no formal obligation to meet with the Philadelphia-based cable firm.

Yet, as one institutional investor noted, the board will be hard-pressed at this point not to explore all alternatives, including a deal with Comcast.

On Wednesday night, Disney's board said it was splitting the chairman and CEO posts, putting Mitchell in the former and keeping Eisner in the latter.

Some anticipated that this action would anger many Disney investors who are calling for Eisner's ouster, and could drive Disney's stock lower. That would narrow the gap between the value of Comcast's stock-swap bid and Disney's market price.

Comcast shares rose 47 cents to $30.40 on Nasdaq on Wednesday, the highest closing price since Feb. 18. Disney shares fell 11 cents to $26.65 on the New York Stock Exchange.

At Comcast's latest price, its offer of 0.78 share for each Disney share was worth $23.71 a share to Disney owners, or 11% below the firm's market price. That gap was as wide as 16% on Feb. 12.

"The negotiating leverage has shifted back to Comcast," said Aryeh Bourkoff, who covers the firm for brokerage UBS.

If the Disney board continues to rebuff Comcast, Bourkoff and other analysts said, one tactic the cable company could employ is to simply walk away.

Disney's stock might then drop even more, forcing the company to the negotiating table.

Comcast reiterated Wednesday that it has no plans to sweeten its bid because no competing offers have emerged.

Some analysts suggested that Comcast could lose out on Disney altogether if Eisner ultimately resigns. "If Eisner goes, Disney stock jumps, making it too expensive for Comcast to buy the company," said Tom Eagan, who tracks Comcast for Oppenheimer & Co.

Shareholders might also bid up Disney's stock if Mitchell were to soon give over the chairman's job to a widely respected elder statesman of business, such as retired General Electric Corp. chief Jack Welch.

The institutional investor said another happy ending would be if Disney bought Pixar Animation Studios and said that its chairman, Steve Jobs, would succeed Eisner.

"Comcast's fate depends on how the Disney board responds," said the investor.

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