Comcast offers 66 Billion Dollars for Disney.

SirFozzie · 02-11-2004, 07:34 AM

Since just like that other thread I'm in, I'd get censored for anything worse...

HOLY HECK!!!

NEW YORK (CNN/Money) - Comcast Corporation on Wednesday made a bid to merge with Walt Disney Company in tax-free transaction valued at $66 billion, including the assumption of debt.

Comcast said it would issue 0.78 share of Comcast Class A shares for each Disney share. Disney shareholders would receive a premium of over $5 billion, based on Tuesday's closing prices, the cable company said.

Comcast said Disney chairman Michael Eisner has been unwilling to discuss the deal.

Disney (DIS: Research, Estimates) shareholders would own 42 percent of the combined company under Comcast's proposal. The combination would create one of the world's leading entertainment and communications companies.

JonInMiddleGA · 02-11-2004, 07:41 AM

Quote:

Disney shareholders would receive a premium of over $5 billion

Y'know, a billion here and a billion there, sooner or later it adds up to real money.

Primal · 02-11-2004, 11:07 AM

And to think I just bought disney on monday.... already up 3.38 today.

Ksyrup · 02-11-2004, 11:37 AM

CNN is reporting the deal would be worth $54 billion, for what it's worth.

Blade6119 · 02-11-2004, 11:38 AM

doesnt really matter...54-66 billion is still way too much

sterlingice · 02-11-2004, 11:48 AM

Anyone care to point out how Comcast recoups their $66B fee for Disney? It's not like the company makes $5B a year and you just make it back in less than 15 years? I'm guessing this is another of those "gut the company, sell off the parts, and then send it on it's way" deals. But maybe I'm wrong- I just don't know and am curious. How does this deal help anyone but the Disney shareholders?

SI

rkmsuf · 02-11-2004, 12:03 PM

I just like saying "stock swap" so I'm for it...

ISiddiqui · 02-11-2004, 12:17 PM

Quote:

Anyone care to point out how Comcast recoups their $66B fee for Disney?

Profits from Disney. I'm sure Disney isn't in the red

.

Maple Leafs · 02-11-2004, 12:22 PM

Quote:

Originally Posted by sterlingice

Anyone care to point out how Comcast recoups their $66B fee for Disney?

Does Disney have a lot of cash?

Often in these cases, the buyer will use the buyee's own cash for the purchase.

digamma · 02-11-2004, 12:41 PM

Quote:

Originally Posted by sterlingice

Anyone care to point out how Comcast recoups their $66B fee for Disney? It's not like the company makes $5B a year and you just make it back in less than 15 years? I'm guessing this is another of those "gut the company, sell off the parts, and then send it on it's way" deals. But maybe I'm wrong- I just don't know and am curious. How does this deal help anyone but the Disney shareholders?

SI

It is a stock for stock deal, so shareholders from both company's will end up with the security of a much larger company, that will ultimately be a stronger security with more upside than either of the two smaller securities. The current owners of Comcast will be diluted in terms of their share percentage, but their single shares will represent ownership of the combined company. There will be accounting aspects, on which I am not qualified to comment, but it is not like simply shelling out x in cash and making it up with profits.

One thing to keep an eye on: because it is stock for stock (and represents a "significant" enough dilution of Comcast), the transaction will need to be approved by the shareholders of both companies. That part could be interesting.

Also, with entertainment companies, the trend hasn't really been to sell off the parts, like we've seen with the more manufacturing type deals (i.e., Northrop Grumman-TRW). Instead, the trend has been to merge into larger conglomerates--Viacomm, Sony, Interactive Corp., etc.

EDIT--mistakenly left out the significance of the Comcast dilution as to what requires their shareholder approval. I assume Comcast is a Delaware corp. I think the threshhold there is 20%.

JonInMiddleGA · 02-11-2004, 12:51 PM

I doubt Disney would be considered as "sitting on lots of cash' considering they've got some $11B in debts right now.

I'd not underestimate the ego factor in this deal either. I mean, think about it --
You're Comcast, the largest cable service provider in the country. You also own controlling interest in some of the most successfull cable networks in the country, and some others that aren't half -bad (in terms of their finances, regardless of what you might think of their programming).

And now you'd add to that pile of goodies a major broadcast network, plus more cable network giants plus one of the legendary name brands in history.

I'm not suggesting ego is the only, or even the primary, motivation. But I believe it's in the mix somewhere.

Also, by combining the cable networks, there's a great potential for driving up existing revenue from the lesser ones (by packaging them with the powerhouses; i.e. sell time on OLN & ESPN's weekend morning outdoor block as a package deal).

And then there's at least some money to be made in the exchange of rights fees being paid to the networks. Suddenly, all those ESPN/Disney et al fees aren't leaving the family, they're just changing pockets in the same pair of pants. And TimeWarner & the rest of the cable systems are also paying you for those programs instead of a 3rd party.

I see the potential for Comcast here, although not quite as much as they seem to, but there do appear to be some advantages to this arrangement.

sterlingice · 02-11-2004, 01:37 PM

Thx for the explanation, Digamma.

SI

SunDancer · 02-11-2004, 02:57 PM

[quote=JonInMiddleGA]I doubt Disney would be considered as "sitting on lots of cash' considering they've got some $11B in debts right now.
/[quote]

How do companies get to run up so much debt without getting to trouble/bankruptcy?

SackAttack · 02-11-2004, 03:24 PM

Depends on the revenue stream of the company, I'd imagine. If you're clearing, say, $30B a year in revenue, you gotta figure there's gonna be folks willin' to take a chance on your credit.

Primal · 02-11-2004, 03:31 PM

Quote:

Originally Posted by JonInMiddleGA

And then there's at least some money to be made in the exchange of rights fees being paid to the networks. Suddenly, all those ESPN/Disney et al fees aren't leaving the family, they're just changing pockets in the same pair of pants. And TimeWarner & the rest of the cable systems are also paying you for those programs instead of a 3rd party.

Plus on of the biggest things is Comcast loves their "On Demand" if this goes through they'd have access too all of Disney's Movies and ESPN for on demand. That could be a big market.

Taur · 02-12-2004, 12:10 AM

Right now is an excellent time to make a move on Disney.

The last Disney family member has been removed from the board. He went out kicking and screaming. Calling the CEO of Disney all but the anti-christ. Claiming that he has turned the Disney company into a second rate company.(which he has)

The great Disney parks of the Past are quietly playing 2nd fiddle to the Universal counterparts down in florida.

Disney has 1 and only 1 more feature animated film in the works. They will be laying off over half of their artists and trying to convert the other artists into CGI experts over the next year. Their animation department is currently in the middle of a civil war, as the old school artists try to hold off the young computer programers of the future. All this While "Pixar"(sp) is taking the animation genre to new levels and quickly leaving Disney in the past.

Pearl HArbor destroyed their Movie Studio.
Treasure Planet destroyed their Animation Studio.
And, Eisner's backwards thinking destroyed their Theme Parks

So yes, now is the time to make a move on Michael Eisner's head. I guess what best describes Disney now would be "2nd rate".

Now is the time to slay this Giant by making a push/plea to Disney stock holders.

02-11-2004, 11:37 AM	#4
Ksyrup This guy has posted so much, his fingers are about to fall off. Join Date: Nov 2000 Location: In Absentia	CNN is reporting the deal would be worth $54 billion, for what it's worth. __________________ M's pitcher Miguel Batista: "Now, I feel like I've had everything. I've talked pitching with Sandy Koufax, had Kenny G play for me. Maybe if I could have an interview with God, then I'd be served. I'd be complete."

02-11-2004, 11:38 AM	#5
Blade6119 Coordinator Join Date: Dec 2000 Location: Scottsdale, Arizona	doesnt really matter...54-66 billion is still way too much __________________ *Underachievement* The tallest blade of grass is the first to be cut by the lawnmower. *Despair* It's always darkest just before it goes pitch black. *Demotivation* Sometimes the best solution to morale problems is just to fire all of the unhappy people. http://www.despair.com/viewall.html

02-11-2004, 11:48 AM	#6
sterlingice Hall Of Famer Join Date: Apr 2002 Location: Back in Houston!	Anyone care to point out how Comcast recoups their $66B fee for Disney? It's not like the company makes $5B a year and you just make it back in less than 15 years? I'm guessing this is another of those "gut the company, sell off the parts, and then send it on it's way" deals. But maybe I'm wrong- I just don't know and am curious. How does this deal help anyone but the Disney shareholders? SI __________________ Houston Hippopotami, III.3: 20th Anniversary Thread - All former HT players are encouraged to check it out! Janos: "Only America could produce an imbecile of your caliber!" Freakazoid: "That's because we make lots of things better than other people!"

02-11-2004, 12:03 PM	#7
rkmsuf Head Coach Join Date: Dec 2001	I just like saying "stock swap" so I'm for it... __________________ "Don't you have homes?" -- Judge Smales

02-11-2004, 01:37 PM	#12
sterlingice Hall Of Famer Join Date: Apr 2002 Location: Back in Houston!	Thx for the explanation, Digamma. SI __________________ Houston Hippopotami, III.3: 20th Anniversary Thread - All former HT players are encouraged to check it out! Janos: "Only America could produce an imbecile of your caliber!" Freakazoid: "That's because we make lots of things better than other people!"

02-11-2004, 11:07 AM	#3
Primal High School JV Join Date: Jan 2002 Location: Huntington Beach, CA	And to think I just bought disney on monday.... already up 3.38 today.

02-11-2004, 12:51 PM	#11
JonInMiddleGA Hall Of Famer Join Date: Nov 2000 Location: Behind Enemy Lines in Athens, GA	I doubt Disney would be considered as "sitting on lots of cash' considering they've got some $11B in debts right now. I'd not underestimate the ego factor in this deal either. I mean, think about it -- You're Comcast, the largest cable service provider in the country. You also own controlling interest in some of the most successfull cable networks in the country, and some others that aren't half -bad (in terms of their finances, regardless of what you might think of their programming). And now you'd add to that pile of goodies a major broadcast network, plus more cable network giants plus one of the legendary name brands in history. I'm not suggesting ego is the only, or even the primary, motivation. But I believe it's in the mix somewhere. Also, by combining the cable networks, there's a great potential for driving up existing revenue from the lesser ones (by packaging them with the powerhouses; i.e. sell time on OLN & ESPN's weekend morning outdoor block as a package deal). And then there's at least some money to be made in the exchange of rights fees being paid to the networks. Suddenly, all those ESPN/Disney et al fees aren't leaving the family, they're just changing pockets in the same pair of pants. And TimeWarner & the rest of the cable systems are also paying you for those programs instead of a 3rd party. I see the potential for Comcast here, although not quite as much as they seem to, but there do appear to be some advantages to this arrangement.

02-11-2004, 02:57 PM	#13
SunDancer College Benchwarmer Join Date: Sep 2002	[quote=JonInMiddleGA]I doubt Disney would be considered as "sitting on lots of cash' considering they've got some $11B in debts right now. /[quote] How do companies get to run up so much debt without getting to trouble/bankruptcy?

02-11-2004, 03:24 PM	#14
SackAttack Head Coach Join Date: Oct 2000 Location: Green Bay, WI	Depends on the revenue stream of the company, I'd imagine. If you're clearing, say, $30B a year in revenue, you gotta figure there's gonna be folks willin' to take a chance on your credit.

02-12-2004, 12:10 AM	#16
Taur High School Varsity Join Date: Jan 2002	Right now is an excellent time to make a move on Disney. The last Disney family member has been removed from the board. He went out kicking and screaming. Calling the CEO of Disney all but the anti-christ. Claiming that he has turned the Disney company into a second rate company.(which he has) The great Disney parks of the Past are quietly playing 2nd fiddle to the Universal counterparts down in florida. Disney has 1 and only 1 more feature animated film in the works. They will be laying off over half of their artists and trying to convert the other artists into CGI experts over the next year. Their animation department is currently in the middle of a civil war, as the old school artists try to hold off the young computer programers of the future. All this While "Pixar"(sp) is taking the animation genre to new levels and quickly leaving Disney in the past. Pearl HArbor destroyed their Movie Studio. Treasure Planet destroyed their Animation Studio. And, Eisner's backwards thinking destroyed their Theme Parks So yes, now is the time to make a move on Michael Eisner's head. I guess what best describes Disney now would be "2nd rate". Now is the time to slay this Giant by making a push/plea to Disney stock holders. __________________ END OF LINE.....

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