ECONOMICS REPORT - Comcast Tries to Buy Disney
By Mario Ritter
Broadcast: Friday, February 20, 2004
This is Bob Doughty with the VOA Special English Economics Report.
Takeovers are a common part of business. One company offers to buy a controlling share of stock in another. But that other company may not want to be bought. What then?
Last week, in the United States, Comcast offered to buy the Walt Disney Company. Disney did not ask for the offer. So it is considered a hostile takeover attempt.
Comcast is the largest provider of cable television in the United States. More than twenty-one million people buy its service. Disney makes films and many other media products. It operates theme parks around the world. And it owns major radio and television broadcast companies in the United States.
In its proposal, Comcast estimated the value of Disney at sixty-six-thousand-million dollars. Comcast offered to pay for the deal with shares of stock. It offered to trade point-seven-eight of a Comcast share for each Disney share.
Under the offer, Disney shareholders would own forty-two percent of the combined company. But the price of Disney stock went up after the offer, while shares in Comcast went down.
This week the Disney board of directors rejected the offer. It says Disney is worth more than Comcast is offering.
Disney shareholders will meet in Philadelphia for their yearly meeting on March third. At that time, they will vote for members of the board of directors.
Former board members Roy Disney and Stanley Gold say they will ask shareholders not to re-elect Disney Chairman Michael Eisner to the board. Mister Eisner has led the company since nineteen-eighty-four. He has angered many people. Comcast might be in a better position to take over Disney without Mister Eisner.
Kermit, make friends with ...
A deal with Disney would create the biggest media company in the world, bigger than Time Warner.
In a separate development, Disney announced this week that it will buy the Muppets. Disney will pay the Jim Henson Company ninety-million dollars for the rights to Kermit the Frog, Miss Piggy and other characters.
These will join the famous Disney characters like Mickey Mouse.
And, in other business news this week, Cingular Wireless offered to buy A-T-and-T Wireless. The deal would create the biggest system for wireless telephone in America. Cingular is jointly held by two companies, S-B-C Communications and Bell South. Earlier, Vodafone of Britain made an unsuccessful offer to buy A-T-and-T Wireless.
This VOA Special English Economics Report was written by Mario Ritter. This is Bob Doughty.