On this day in 2004, Comcast, America’s largest cable operator, abandons its $54 billion hostile takeover bid for the Walt Disney Company in the face of faltering stock prices and Disney’s continued refusal to entertain the proposal.
If accepted, Comcast’s February bid would have made it the largest media company in the world. Based in Philadelphia, Comcast had begun as a regional cable company in Tupelo, Mississippi, and increased its holdings through a series of lucrative acquisitions. For its $54 billion in stock, Comcast would have received control of Disney’s film studio, the ABC television broadcasting network and the cable channel ESPN, among other assets. Observers of the proposed merger predicted problems similar to those that had faced other media giants, such as AOL-Time Warner, including scrutiny from the Federal Communications Commission (FCC), which had objected to ownership of local networks and cable stations in the same market.
The Disney board evaluated Comcast’s offer and rejected it, stating that the Comcast bid was worth $3.60 per share less than the current market price of Disney stock. Still, Disney’s troubles--and those of its chief executive, Michael Eisner--did not begin or end with the potential Comcast takeover. Credited with reviving Disney’s sprawling empire since he assumed the reins in 1984, Eisner had reportedly provoked the wrath of other studio executives and shareholders over the previous several years with his management style and decisions, according to The New York Times.
With Disney losing its edge in animation, Eisner drew particularly sharp criticism for his ongoing failure to renew a distribution deal with the pioneering animation company Pixar Inc., owned by Steve Jobs, founder of Apple Computer. Disney’s deteriorating relationship with Pixar, among other issues, sparked a shareholder’s revolt led by Roy Disney, the nephew of the company’s founder and the former head of its animation department. In March 2004, a few weeks after Comcast made its takeover bid, Eisner lost his post as chairman of the Disney board of directors by way of a no-confidence vote. Though Disney’s fortunes began to turn around over the next year, Eisner would step down as chairman in September 2005; Disney’s president, Robert Iger, succeeded him.