The Time Comcast Tried to Buy Disney

The Walt Disney Company is no stranger to acquisitions. In fact, between Marvel, Pixar, Star Wars and Fox, the idea of Disney buying up company after company has become a bit of a running joke over the last decade. However, it was wasn’t too long ago that it was Disney themselves who were at risk of being purchased.

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Over nearly 20 years they went from struggling to ward off raiders to being a multimedia giant. However, that wouldn’t last forever. Many felt that Eisner lost his touch and started to steer the company in a poor direction. By the early aughts the theme parks were starting to slow down, their animated features were under performing, their network ABC was struggling to keep up, and those once new ventures like The Disney Store were starting to shrink. It was going poorly enough that Walt’s nephew, Roy E Disney, had begun a public campaign to get Eisner removed as CEO. It was at that moment that the telecommunications conglomerate, Comcast, decided to strike.

They wanted the offer to be friendly, so in early February of 2004 Comcast chairman and CEO Brian Roberts called Eisner to personally present the offer of merging the two companies together. According to Roberts, the call lasted only minutes and Eisner rejected the idea so quickly that he wasn’t even able to bring up the price. He was surprised. Resistance to the idea wasn’t unexpected, but for the topic to be shut down so quickly and completely was.

So a couple of days later, Comcast went over Eisner’s head and made a public unsolicited offer to the shareholders of The Walt Disney Company. Comcast offered an all-stock deal in which Disney shareholders would receive .78 shares of Comcast for every 1 share of Disney they owned. Factoring in the value of both companies at the time, it was a total offer of 51.1 billion dollars.

So what happened? Well beyond the general public opposition to the bid, Disney would have luck on their side. It would just so happen that the day Comcast would make their offer would also be the day that Disney would release their Q1 earnings reports. Thanks in part to the massive success of both Finding Nemo and Pirates of the Caribbean, Disney reported a 19% increase in revenue.

Now typically when one company announces an offer to buy another, it’s not uncommon to see the share price of the purchaser drop a little, and the share price of the target company go up a little. However between all the public resistance to the idea and Disney’s better-than-usual performance that quarter, the gap was wider than usual. This was a problem for Comcast because like I mentioned earlier, their offer was an all-stock offer. The share changes resulted in the value of the offer dropping from 51 billion dollars to 48 billion dollars in just two days. 3 billion dollars were off the table literally overnight.

For the following month, neither side made a move. Comcast figured that since no other media company was currently in a position to buy Disney, they didn’t have to worry about keeping their bid competitive. However Comcast did point out that they wouldn’t leave the offer on the table forever. Meanwhile, Disney shareholders also didn’t make any moves, as the situation wasn’t giving them any new reasons to consider the takeover. Comcast wasn’t budging on the price and they still weren’t exactly primed to dive into the world of theme parks, which was a massive part of Disney’s business.

So on April 28th, whether it was the lack of enthusiasm from Disney shareholders, or Comcast shareholders, or the public, or the general idea that the offer was too low, or a combination of all of the above, Comcast formally withdrew their bid to purchase The Walt Disney Company.

Disney was in the clear for now, but the entire episode served as a highlight of where Eisner’s leadership decisions had lead the company, which would eventually end with his ousting just a year later in 2005. A great topic for another video. The three month ordeal was a sobering reminder that even after the decades of growth and expansion at The Walt Disney Company, there was still always a bigger fish out there potentially ready to eat them up.