Comcast bid for Disney withdrawn

Chitra Somayaji

Wednesday, April 28, 2004 | 9:06 a.m.

PHILADELPHIA -- Comcast Corp. Chief Executive Brian Roberts today withdrew his $54.1 billion unsolicited bid for Walt Disney Co., shelving his attempt to create the world's largest media company.

"It has become clear that there is no interest on the part of Disney's management and board in putting Comcast and Disney together," Roberts, 44, said in a statement. "As a result, we have withdrawn our offer."

Shares of Comcast, the world's biggest cable-television operator, through Tuesday had fallen 12 percent since the Feb. 11 offer for Disney, which owns entertainment assets including the ABC and ESPN TV networks, film studios and theme parks. The withdrawal is a setback to Roberts' effort to add content to his cable systems, which reach 21.5 million homes.

"Comcast will try to run their business in such a way to convince investors to come back to the fold," said Drake Johnstone, an analyst at Richmond, Virginia-based Davenport & Co., who has a "neutral" rating on the stock. "But the big question I have is, if not Disney, then who else? In my view, they have shown their hand that they want content."

Shares of Philadelphia-based Comcast rose 82 cents, or 2.7 percent, to $30.79 at 9:54 a.m. today in New York Stock Exchange composite trading. Burbank, Calif.-based Disney fell 34 cents to 23.84.

The withdrawal alleviates a threat to Disney Chief Executive Michael Eisner, who is fending off calls for his ouster from ex-director Roy Disney. The board of Disney, the second-biggest U.S. media company, Tuesday said it has "complete confidence" in Eisner.

Before announcing the termination of the Disney offer, Comcast today reported it earned $65 million in the first quarter by adding customers for high-speed Internet and digital-TV service.

Comcast reported net income of 3 cents a share compared with a loss from continuing operations of 16 cents a share, or $355 million, a year earlier. Revenue rose 9.9 percent to $4.91 billion from $4.47 billion, Comcast said in a statement. Results from the QVC network, which Comcast sold in September, were accounted for as discontinued operations.

Disney's board on Feb. 16 rejected as too low Roberts' offer to swap 0.78 Comcast shares for each share of Disney. Roberts in March said he wouldn't raise the bid for Disney when there were no other offers.

"Comcast's bid for Disney has shaken up the media industry and suggested there's still room for consolidation," said Elizabeth Miller, a managing director at New York-based Trevor Stewart Burton & Jacobsen. "Comcast certainly can make another hostile bid for Disney at some point or look to other media giants."

"We did not expect them to pull out this soon," Rich Greenfield, an analyst at Fulcrum Global Partners in New York, said of Comcast. "But last night's announcement from Disney clearly showed there was zero interest and zero possibility."

He has a "neutral" rating on shares of both Comcast and Disney.

Roberts is winning customers from satellite-TV operators such as DirecTV Group Inc. and telephone companies by selling faster Web access, high-definition TV and other new services.

Comcast, which competes with lower-cost Web-access services from Verizon Communications Inc. and Time Warner Inc.'s America Online, won 394,000 high-speed Internet customers to end the quarter with 5.7 million subscribers.

Sales for the product rose 42 percent to $698 million, the company said. Comcast got $42.46 in revenue per subscriber, $1 more than the fourth quarter.

The company added 35,000 subscribers for basic cable, a package of TV channels that include Viacom Inc.'s CBS, Time Warner's CNN and Disney's ESPN.

Comcast also added 192,000 digital-video subscribers in the quarter, after Roberts spent $4.1 billion last year on rebuilding the cable systems acquired from AT&T Corp. in November 2002 to stem the loss of subscribers to DirecTV and EchoStar Communications Corp.'s Dish Network satellite-TV service.

Roberts, who owns 33 percent of Comcast's voting rights, became chief executive after Comcast almost tripled in size by acquiring AT&T Broadband for $56 billion in November 2002. He earned $8 million in salary and bonus last year. Comcast's stock gained 45 percent in the 14 months following that acquisition.