| Tough Call |
16 February 2004
|
ComCast Bids for Disney
The pages of financial history are littered with mergers that failed to deliver more than they promised. AOL-Time Warner was such a disaster that AOL has been dropped from the company name. DaimlerChrysler hasn't been quite that unhappy, but the culture clash has held the company back. So, is ComCast's bid for Disney a disaster waiting to happen? The jury is out on this one.
The biggest concern is the sheer size of the company that will be created should ComCast's hostile bid succeed -- on its own, Disney's valued at around $48 million in this all-stock deal. It could be that there is an upper limit to the efficacy of modern business management beyond which things simply don't work.
Another worry is the amusement park operations. While ComCast can argue that it knows media and entertainment, its people don't seem to have much experience running roller-coasters. In these days of terrorist anxiety, theme parks are a tough business, all the tougher for inexperienced management.
On the plus side, ComCast has successfully integrated AT&T's cable business into its operation. Moreover, Michael Eisner is not flavor of the month at Disney and many things may change if he is no longer around. The Pixar relationship that has collapsed could well be revived under new leadership at Disney. Also, there are a lot of people at ComCast who know Disney's business because they themselves used to work in Mr. Eisner's empire, not least is Stephen Burke who spent 12 years at Disney and now handles ComCast's cable business.
The timing of the bid is fortuitous for ComCast. The announcement came during a two-day investors meeting of Disney shareholders and right after Roy Disney (nephew of the man who drew the mouse) brought his conflict with Mr. Eisner to new levels of hostility. Mr. Eisner, though, has not been at Disney 20 years by being a softy. The fight over the future of the firm will be messy. The question remains, however, if it is worth it.
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