More on Comcast/Disney
The board response from Disney to the Comcast bid was an interesting "Definitely not…at that price." The Disney stock price predictably shot up, the Comcast price went down. As several observers have pointed out, Comcast is in no hurry, and it doesn't look like there's any white knight on the horizon. An upcoming stockholder's meeting in early March (curiously enough in Comcast's own Philadelphia) will take us to the next step.
Meanwhile a few observations.
Muppets
Disney today announced it would buy the Muppets from the heirs of Jim Henson. Kermit and Miss Piggy will join Mickey and Buzz Lightyear as Disney brands, and the company has plans to productize these puppets even further than they have been in the past. While the deal (price not announced) has obviously been in the works for a while, it does illustrate one possible scenario, one in which Disney drives up its own book value by acquisitions so as to make Comcast's job even harder. This could be the first of several Disney deals. The gain of the Muppets can't offset the eventual loss of Disney's deal with Pixar Studios, one of the events that precipitated the Comcast bid.
Media merger danger
A Business Week article ("Mega Media Mergers: How Dangerous?", 2/23/2004) brings up the obvious points:
However logical such deals may seem to the empire builders, they raise new questions about how much consolidation is enough. Concentration of media power in too few hands not only can lead to higher prices for consumers but can hurt variety and quality of programming. It raises the temptation for owners to impose their views on a public with fewer alternatives. And cash-poor independent voices may have trouble getting into vast proprietary networks.
According to same article, the motivator of the acquisition was News Corp.'s acquisition of satellite TV provider DirecTV, which gives them content and distribution. That has the companies that have just distribution or just content, particularly a cable company like Comcast. The article is of the opinion that the next move might be DirecTV's only US competitor, EchoStar. Viacom might be interested.
Media empires
An Economist article ("Hunting Disney". 2/12/2004) sees the takeover as a rebuke to the imperious management style of Eisner. Of course, the Roberts family, which owns and runs Comcast, is no less powerful, if somewhat more of a benevolent monarchy. The family has a majority of the voting shares and, unlike Eisner, is unassailable from the outside. Our read is that the governance of Disney would go from close and secret to closer and secreter with the Comcast takeover.
The article pooh-poohs the danger of media concentration:
The onward march of digital technology which, as it combines with the spread of broadband internet connections, is undermining most firms' business models. Already, cable companies carry data and telephone calls; telephone carriers transport television, films and music. For the couch potato, the range of choice is growing, not shrinking. So from a public-policy point of view, there is little to fear from a Comcast takeover of Disney, or most other big media mergers that may follow it.
This is the FCC argument, but is clearly absurd. This is typical short-term feature of a shift of the competition matrix. Yes, some media companies are having problems now, usual because of stupid business decisions. But in each area the weak ones get acquired, reducing the players (witness the Cingular/AT&T and NBC/Vivendi deals). In addition, the big companies are steadily crossing the categories ad buying into the digital revolution, just like Comcast and News Corp. As this site has shown over and over, the new oligopoly is expert at recovering from disruption, and the content of all sources tends to converge.
