Financial Focus: Comcast/Disney - The Sequel

The war for the future of The Walt Disney Co. rages on, a week after the board rejected Comcast's hostile takeover bid. Barring a second bid by Comcast Corp., the next battle will be fought in the City of Brotherly Love.

That's where The Walt Disney Co.'s board and management team, led by Michael Eisner, will meet its critics during Disney's annual meeting March 3 in Philadelphia. It's also, ironically, the headquarters of Comcast, which surprised the industry a little less than two weeks ago when it made a $66 billion bid for the larger company.

Comcast hasn't been heard from on the topic publicly since last Monday, when it said that its bid for Disney was generous. No further moves have been made since then by Comcast, whose bid is about $3 a share less than Disney's new price on the New York Stock Exchange. But that doesn't mean that there haven't been volleys fired against Disney. There have been more than enough words spoken by Disney and its renegade former directors, Roy Disney and Stanley Gold.

On Friday, Roy Disney and Gold said in a letter to Disney shareholders that Comcast's bid wasn't enough for the Magic Kingdom.

"In the view of many, including us, the Comcast offer does not adequately reflect the true potential value of Disney's assets," they wrote. Gold and Disney urged the shareholders to dump Eisner and the board's chairman, former U.S. Sen. George Mitchell of Maine.

"What Disney needs now is not necessarily new ownership but a new senior management team that can generate superior value from the company's assets," the letter read. "The search by the board for effective, high-quality senior management should commence immediately."

In a statement Monday night denying Comcast's offer, the Disney board stated its strong support of Eisner and the rest of the senior management team. While it didn't close the door on a sale of the company, the board said a successful offer would have to be much more than what Comcast suggested.

On Friday night, Eisner spent about 45 minutes on CNN's "Larry King Live," answering King's questions and a string of mostly theme-park-related queries from viewers in the United States and Canada. Eisner said the company had undergone tough times in both the theme park and ad-supported units following the 2001 terrorist attacks, but that things were starting to turn around. He predicted that this message would shine through at the March 3 annual meeting, where he said he didn't expect major upheaval.

"They [shareholders] will see presentations that will show how strong the company is," Eisner said.

Eisner said Comcast's offer was rejected because it was insufficient.

"It was highly underwhelming," Eisner said.

But he said Disney might be open to a fairly made offer for the company.

"If we get an offer that is in the interest of the shareholders, of which I am a fairly large shareholder, we will not only consider it--if it is really spectacular, we will accept it," Eisner told King on Friday night. "It has to be pretty spectacular to get the great assets of the Walt Disney Co. We are not giving away ESPN and the Disney Channel and the Disney parks and the Disney studio."

When King asked how low Comcast's bid was, Eisner laughed.

"Oh, please," he said.

Eisner's frustration was only apparent at one other time during the interview, wen King asked about the recent deal over fees to carry ESPN with other MSOs like Cox and Charter. Eisner said that negotiations with Time Warner Cable and Comcast, among others, continued.

"I would like more from Comcast, actually, just because I feel that way," Eisner said.

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