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Comcast Tempers Talk of Disney Takeover

Posted on: Tuesday, 9 March 2004, 06:00 CST

Mar. 9--Comcast Corp. downplayed its interest Monday in taking over the Walt Disney Co., saying the entertainment giant was "not a must-have."

"If it happens, great," Comcast Chief Executive Brian Roberts told investors and analysts at a conference in Palm Beach. "If it doesn't, life goes on."

In the past month, Comcast has twice emphasized a desire to purchase Disney, the most recent advance coming last week after Disney's shareholder meeting in Philadelphia.

Both times, Disney's board swiftly rejected the overtures, showing little interest in making a deal. Comcast has thus far declined to raise its bid, now valued at more than $60 billion in stock and debt.

Speaking to investors and analysts at Bear Stearns' media and entertainment conference, Roberts said he remains interested in buying Disney for the right price.

"I believe then, I believe now that if you put the two companies together in a rational way, [that is] fair to both sets of shareholders, that the resulting company will be better for both sets of shareholders," he said.

But, he said, such a deal would not be crucial to the Philadelphia-based cable company's future in the way its purchase of AT&T Broadband in 2002 was.

"AT&T Broadband was a must-have event for our company," he said, because it allowed Comcast to expand its core business: cable. The merger made Comcast the nation's largest cable company.

David Mantell, a cable and media analyst who tracks Comcast for Chicago-based Loop Capital Markets, said there are two ways of reading Roberts' comments.

"Certainly the language is indicative that they appear to be walking away from it [the offer]," Mantell said.

But, he said, Roberts could also be trying to send a message that the offer is firm and that he has no plans to raise it.

Comcast's initial offer included a premium of $5 billion to Disney shareholders.

When the offer was made public, Disney's stock shot up and Comcast's went down, effectively wiping out the premium Comcast had offered for accepting the deal.

Roberts said Monday that he hopes, in time, the stock in both companies would level out, and he showed little interest in raising his earlier offer. Roberts said it is unreasonable to expect Comcast to bid against itself for Disney.

F. Drake Johnstone, a telecom analyst who tracks Comcast for the Richmond, Va.-based Davenport & Company, said Monday's comments could be part of a larger strategy to re-level the playing field.

"They're obviously trying to persuade the investment community that, from their point of view, they don't need to bid up to acquire Disney," he said.

Johnstone suggested that Disney's higher stock price reflects a hope by some shareholders that Comcast would sweeten its offer. By signaling that was unlikely, the company could be hoping interest in Disney stock will wane.

A lower Disney stock price makes Comcast's offer look more impressive, strengthening the cable company's hand, Johnstone said.

A Comcast spokesman would not comment further on Roberts' remarks. Disney officials also would not comment, referring to a statement put out by Disney's board last week in which it called Comcast's proposal "inadequate."

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(c) 2004. Distributed by Knight Ridder/Tribune Business News.

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