Thoughts on Comcast/Disney
A few notes about the Comcast surprising offer to acquire Disney follow. At this point, who knows if there's a chance it will happen? Like most hostile takeovers it will receive dogged resistance, and there will be other competitive bids as well now that the once unthinkable thought of Disney being "in play" has been opened up.
Comcast has grown by just such daring moves, leading up to its 2002 acquisition of AT&T Cable. By all accounts, that move was a smashing success. In just over a year, the companies have been convincingly integrated, so the usually long digestive process is already over. Comcast seems to be very skilled at integrating its acquisitions, and it has come out a winner.
The proposed Disney merger would once against involve a conduit (the cable system) buying up a content-maker, much like GE and Universal. This seems to be the trend in the media, but it has its dangers. The problem comes when a big company stifles creativity from many sources and ends up producing just more of the same stuff. That's been a problem that already been depressing ABC/Disney's fortunes. Creating exciting content is often a matter of luck, and the odds are better when there are lots of independent sources (subcontracted studios) trying ideas. While just being one of the few will get you some level of market share, big content producers have real problems innovating, lust like big pharmaceutical companies. (Viacom has been one of the best at nurturing creative modules in a mega-corporation.)
When the question of which is the better position to be in, the creator or the distributor, many companies now want to hedge their bets by being in both businesses. Of course, they can fail at both, too. This was, in a primitive form, the rationale for the AOL-Time-Warner debacle.
Given that, Comcast is different from most other media companies in that the vanity of the principals appears to be relatively small and the ability and willingness to delegate (to trusted managers) is strong. That contrasts with Michael Eisner's micromanagement of Disney, which is one of that company's major problems. Similar ego problems have bedeviled Vivendi and Time-Warner.
Comcast has reacted better than any other media company to adapt to, even embrace, changes in entertainment technology. They are a leader in high-speed cable Internet, in digital TV, in video on demand, and are set to lead in VOIP (Internet telephony). While other companies like Time-Warner, Disney, and others have stumbled in the face of rapid technology change, Comcast has been pretty sure-footed. That's a big plus in a time when digitalization is revolutionizing the industry.
Because Disney and Comcast only slightly overlap, there should be little antitrust difficulty. Comcast, if successful, may be required to drop a few cable channels, the one area of overlap. If Comcast has gone after another cable company (like Cox), the red flags would have gone up. But a vertical merger is less subject to scrutiny than a horizontal one (See Fox and DirecTV).
Comcast feels it has to move because, in spite of its local monopoly, satellite TV is poised to make major inroad, with the support of Fox which now owns DirecTV and local phone companies which are bundling the service with their phone services and DSL Internet connectivity. Being isolated in cable is a dangerous position, so Comcast wants to get beyond it.
It's pretty remarkable that there's enough billions of dollars sitting around eager to help with this deal, the big bank mergers, and the current bids for AT&T Wireless. Comcast management is very deliberate, so we can be sure that they lined up the backing well in advance. If this deal doesn't go though, there's plenty of capital waiting for the next big acquisition, thanks to a rising stock market.
5:49:03 PM 
|
|
