• by February 17, 2004

IT MAY NOT PROVE SUCH A SMALL OFFER, AFTER ALL - We consider ourselves pretty astute judges of media spin, but the Riff must confess that we're finding ourselves a bit confused by the investor relations spin coming from the Comcast and Disney boards. It's not that we don't understand the Disney board's effort to get Comcast to sweeten the offer. It's the backhanded way they're voicing support for Disney chief Michael Eisner. The Disney directors voted unanimously to reject Comcast's bid, ostensibly because it didn't recognize the current market value of Disney's shares. The board then went on to express "confidence in the business, financial and creative direction of Disney under the leadership of Michael Eisner and his management team," asserting that the board members expect Eisner's team to "maximize shareholder value." If the sentiment of the shareholders expressing themselves on Yahoo! Finance's message board are any indication, the Disney board clearly is out of sync with the thinking of Disney's shareholders on that one. But we understand that Disney's board has to put on a good game face if they want Comcast to raise its bid, which they clearly do. Either that, or entice another suitor to step forward. "We are committed to creating shareholder value now and in the future and will carefully consider any legitimate proposal that would accomplish that objective.

In any proposal by Comcast, or any other company, the Board will consider and assess the value to be received in exchange for the shares of Disney, and also the appropriate premium to reflect the full value of Disney." The only question the Riff has is, which is the greater commitment of the Disney board: Michael Eisner, or a stock market premium? And while someone may yet test that allegiance, it may not be Comcast. Calling its initial bid "generous" and a "significant premium over Disney's unaffected share price during any relevant measurement period over the last three years," Comcast's response seemed to indicate it wouldn't be digging deeper into its pockets anytime soon. "We maintain the belief that our merger proposal represents a sound and compelling proposition for both sets of shareholders," concluded Comcast in a statement following the Disney board's rejection of its offer. Now, it could be that Comcast chief Brian Roberts was simply playing coy. Or it could be that he has another play in mind, and the Riff thinks it's spelled P-R-O-X-Y. With a significant number of Disney shareholders already ready to revolt over the languishing results of Eisner's most recent run, Roberts may just take his offer directly to Disney's shareholders and wage a proxy war.

After all, he may already have the support of a few disaffected shareholders, whose last names just happen to be Disney. And they may deem Comcast's initial offer, or possibly a mildly enhanced one, a premium over their current positions. That premium, of course, would have less to do with the immediate liquidity of Disney shares as much as it might with the long-term value of a merged Comcast/Disney empire that could well cast an enchanted shadow over even the most magical of current media kingdoms. In fact, a proxy battle may have been Roberts' plan from the start, but being the prudent and gentlemanly businessman the Riff considers him to be, he at least wanted to take the courteous steps. First he makes a personal offer to Eisner, which the Magic King-leader soundly rejects. Then he makes the offer public, vis a vis a direct appeal to the Disney board. Is anyone surprised that they also rejected it? In the end, the market will decide what the appropriate take-out value is for Walt Disney Co., but the Riff has one last question: If Comcast's initial offer really was so paltry, why hasn't anyone else stepped forward to top it and scoop up what would still seem to be some prized assets at a song? Coming soon to an investment theater near you: Comcast/Disney, The Sequel.

NOW DEAN LOSES THE MEDIA'S VOTE - Howard Dean may have transformed presidential campaigning with a grass roots Web strategy that netted him plenty of contributions, an early lead in the polls and lot's of hype. Now he's running low on campaign funds, he's plummeted in the polls and, worst of all, he's losing the hype. Dean, who has been the most heavily spun candidate since the Democratic primary process began, has suddenly fallen behind John Kerry and is close to dropping below John Edwards in share of media attention, according to just-released estimates from Factiva, a joint-venture of Dow Jones & Co. and Reuters that tracks media coverage. Dean's coverage first slipped below Kerry's for the week ending Feb. 8, but data from the week ending Feb. 15 shows Kerry expanding his lead and Edwards nipping at Dean's media coattails. Of course, not all news coverage is good news coverage. Even if they are spelling Dean's name right, much of his news media volume stems from negative spin associated with a flailing campaign. And that's bound to get even worse this week with his campaign chairman suddenly resigning.

Media Coverage For Democratic Presidential Candidates

John Kerry       2,311 media mentions 
Howard Dean      1,409 media mentions           
John
Edwards     1,122 media mentions 
Dennis Kucinich    497 media mentions 
Al Sharpton        391 media mentions 

Source: Factiva Media Visibility Index, media mentions for the week ending Feb. 15.