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Comcast's Bid For Disney Makes Sense In Principle, said Strategy Analytics
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Topic Publications & Resources
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Comcast's Bid For Disney Makes Sense In Principle, said Strategy Analytics
Boston, MA - February 13, 2004 /Wi-Fi Technology News/- Comcast Corp.'s surprise bid to acquire the Walt Disney Company reflects the new competitive realities in Digital TV and broadband Internet services, according to global research and consulting firm Strategy Analytics. But the chances of the unsolicited deal going forward under the terms outlined today remain uncertain.
"Owning Disney would let Comcast combine high-value TV programming and other content with its extensive cable TV distribution systems," says James Penhune, Director of Strategy Analytics' Broadband Media and Communications practice. "In a market where programming costs are a key issue for cable operators, the deal would give Comcast direct access to movies and programming from ABC, ESPN, Miramax and other leading Disney brands. And in the broadband Internet market, many Disney properties promise to create new revenues through distribution to millions of cable modem customers."
Comcast is the largest US cable TV operator, serving 21 million customers nationwide. It is also a leading broadband Internet service provider with over five million cable modem subscribers.
Penhune adds that Comcast's bid for Disney should be viewed within the context with other recent media mergers. "In 2003 global media giant News Corp. took control of DirecTV, whose satellite TV service delivers programming to nearly 12 million U.S. homes. The top cable operators have been bracing themselves for renewed competition from satellite services, and are now seeking comparable deals of their own. At the same time, the success of Comcast's previous acquisition of the cable TV operations owned by AT&T suggest that it might deliver a similar turnaround at Disney, which has been troubled by management and mixed financial results in recent years."
Despite these potential advantages, the deal is opposed by Disney Chairman Michael Eisner. While other Disney principals - particularly board member Roy Disney, who has led a campaign to oust Eisner in recent months - may welcome the idea of a management change, the idea of surrendering the company's independence for anything less than a substantial premium could prove unacceptable.
Whatever the outcome, Strategy Analytics expects the dealing to continue in the cable space in the year ahead, with operators such as Adelphia Communications, Cablevision Systems and Time Warner Cable all possible candidates for mergers or spin-offs.
About Strategy Analytics
Strategy Analytics, Inc., a global research and consulting firm, provides timely insights and strategic business solutions to companies operating at the convergence of information, communications and entertainment technologies. With worldwide headquarters in Newton, MA and principal offices in England, France and Germany, Strategy Analytics focuses on market opportunities and challenges in the areas of Automotive Electronics, Broadband, Telematics, Wireless Strategies and Enabling Technologies. For more information, see http://www.strategyanalytics.com
US Contact:
Jim Penhune, +1 617 614 0701, jpenhune@strategyanalyticscom
European Contact:
David Mercer, +44(0) 1908 423610, dmercer@strategyanalytics.com
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