Comcast Bids $66 Billion For Disney, Merger Would Make It Largest Media Player

In a surprise move that could considerably alter the media landscape, Comcast Corp., the undisputed powerhouse in cable television, Wednesday morning made an offer to acquire Walt Disney Co., a leading studio and theme park operator that owns ABC, ESPN and a variety of other cable networks, as well as a powerful group of broadcast TV stations. The combined company would be the largest in the media marketplace.

The proposed deal would give Comcast shareholders a 58 percent stake in the merged company, which Comcast President-CEO Brian Roberts, said would be in a position to "compete vigorously with other entertainment and communications companies, including newly created integrated distribution/content providers."

The offer, apparently unsolicited, comes as Disney management is under siege from some disgruntled stakeholders, including Roy Disney, nephew of founder Walt Disney, who has been calling for the ouster of Disney chief Michael Eisner.

In his public offer to acquire Disney, Roberts said Eisner rebuffed an offer made by Roberts earlier this week and consequently is taking the proposal "directly to you and your board."



Disney is releasing its fourth quarter earnings today and Disney management is scheduled to meet with investors and analysts at an investors conference today.

"I know Disney's businesses very well," said Steve Burke, president of Comcast Cable, whose father Dan Burke, helped engineer the sale of Capital Cities/ABC to Walt Disney Co., which previously was one of the biggest media mergers and one that helped put Disney into the mega media company class.

Comcast proposed a tax-free merger, which would exchange a 0.78 share of Comcast's class A voting stock for each share of Disney stock, values Disney at $66 billion. Disney shares traded up 1.3 percent to close at $24.08 on Tuesday, which would give the company a market capitalization of $49.25 billion. Comcast said its proposal would represent a $5 billion premium to Disney shareholders.

Based on Tuesday's close of $33.93 per share, Comcast's market capitalization is currently valued at $76.37 billion.

The merger of the two companies would indeed create a new powerhouse that would rival even the biggest of their competitors both in market size, as well as in vertical integration across media markets.

Assuming no run-up in their market values, Comcast/Disney would have a capitalization of $142.37 billion, making it considerably bigger than the market cap of its next closest media rival, Time Warner, which has a market cap of $80.74 billion.

The deal could also revive a new round of mega media mergers and acquisitions, something industry investment bankers have been predicting was poised to happen.

Even if Disney shareholders approve the offer, the deal would face scrutiny from regulatory bodies.

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