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Comcast drops bid for Disney

The Associated Press

PHILADELPHIA — The cable giant Comcast Corp. is dropping its takeover bid for The Walt Disney Co., saying Disney management has made it clear it has no interest in putting the two companies together.

The decision was announced Wednesday by Brian L. Roberts, president and chief executive of Comcast, who said the Disney stance led him to conclude it was time to abandon the proposed merger.

Philadelphia-based Comcast, the nation’s largest cable company, stunned the industry Feb. 11 when it offered stock valued at $54 billion at the time for the media and entertainment powerhouse.

But Disney rejected the offer, saying it was too low. Disney shares have been trading higher than what Comcast was offering, a signal that the original offer would not succeed.

“We have always been disciplined in our approach to acquisitions,” Roberts said in Wednesday’s statement. “Being disciplined means knowing when it is time to walk away. That time is now.”

Later in a conference call, Roberts said Comcast would look at other acquisition targets, including bankrupt cable company Adelphia Communications Corp., but didn’t feel pressured to expand.

“The Adelphia situation did not factor into today’s announcement,” he said. “That’s a new situation for sure. We’ve always looked at cable systems so I suspect we’ll look at those.”

Roberts said the company wants to be “opportunistic, entrepreneurial,” but added, “With 22 million customers, I think we are in the position where we don’t have to make any acquisitions.”

Calls to Disney spokesman John Spelich were not returned early Wednesday.

In early trading Wednesday on the New York Stock Exchange, Disney shares fell 28 cents to $23.90 while Comcast A shares rose 89 cents, or 3 percent, to $30.86.

The decision comes amid turbulent times for the powerful entertainment company, which owns ABC, ESPN, movie studios and theme parks.

The Comcast offer was made as Disney and its longtime leader Michael Eisner were facing pressure from shareholders including one-time board member Roy Disney who were unhappy with the company’s financial performance and its stock price.

Shareholders made their dissatisfaction clear at the annual meeting in March when 45.3 percent of all votes cast withheld support from Eisner for re-election to the board.

After the meeting, Disney’s board split the roles of chairman and CEO, naming board member George Mitchell as chairman and leaving Eisner as CEO.

Eisner and the board nonetheless have repeatedly insisted Disney is headed in the right direction, and did not need to team up with a distribution company like Comcast.

Late Tuesday, Disney’s board after a two-day retreat issued a statement giving its full support to Disney management, including Eisner and president Robert Iger.

Comcast had offered 0.78 of its Class A shares for each Disney share, and that offer was worth about $26.49 to Disney shareholders at the time.

But Comcast shares have fallen since then, and at Tuesday’s closing price the offer was worth about $23.38 per Disney share, or a total of about $48 billion.

Disney shares, meanwhile, ended at $24.18 a share on Tuesday, 80 cents higher than the Comcast bid was worth at the time.

Comcast reported earlier Wednesday a net profit of $65 million, or 3 cents a share, for the first quarter, compared with a loss of $297 million, or 13 cents a share, for the first quarter of 2003.

Revenue rose to $4.9 billion for the quarter ending March 31, up from $4.5 billion in the same period of 2003.

The company added 394,000 high speed data customers and 35,000 basic cable subscribers in the period, it said.