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Comcast walks away from Disney bid

The cable giant withdraws its multibillion-dollar offer to acquire Disney, citing opposition from the entertainment company's board and its own investors.

Comcast said Wednesday that it has withdrawn its multibillion-dollar bid to buy Walt Disney after investors and Disney executives failed to embrace the acquisition.

"I'm very comfortable with our decision to withdraw the Disney offer, even though that was not our original hope going into the deal," Comcast CEO Brian Roberts said in a conference call with investors. "The size of the transaction put so much of our company resources into the deal that some shareholders believed this was a sign that we were losing confidence in the cable business, which we have not."

Comcast announced its bid for Disney in February, proposing a deal that would have created one of the largest media and distribution companies in the world. The deal at the time was valued at $66 billion, including the assumption of $12 billion in Disney debt.

After the Disney offer was first announced, Roberts said publicly that the content Comcast would gain through the merger would power the cable giant's next generation of services, such as video on demand, high-definition TV and streaming media. Yet even at that point, Roberts indicated that he did not view the Disney acquisition as critical to Comcast's business. Rather, he had thought the deal would allow Comcast to innovate its product portfolio faster and make the two companies stronger, he said.

The announcement fueled a controversy over Disney CEO Michael Eisner, who rejected the bid early on. He was forced from his position of chairman of the board after a contentious shareholders meeting at which 45 percent of votes opposed his re-election to the board. On Monday, however, he received the board's official backing.

"It has become clear that there is no interest on the part of Disney's management and board in putting Comcast and Disney together," Roberts said. "I said from the outset that we would not outbid ourselves. In this case being disciplined meant walking away."

"It seemed inconceivable that Disney's board would not want to have a discourse regarding the offer, but they didn't, and we're moving on."
-- Brian Roberts, CEO, Comcast

Roberts repeatedly said that Disney's board made it well known that it had no intention of entering negotiations with Comcast. He also said that he does not intend to revisit the offer anytime in the near future and that Comcast is not in a position where it needs to make an acquisition. In March, Comcast agreed to acquire cable channel TechTV, owned by Paul Allen's Vulcan Ventures, and merge that undertaking with its own G4 video game network.

Comcast has barely finished assimilating the cable properties of AT&T Broadband, which it acquired in 2001 to become the largest cable TV company in the United States.

"It seemed inconceivable that Disney's board would not want to have a discourse regarding the offer," Roberts said, "but they didn't, and we're moving on."

Comcast separately on Monday announced a first-quarter net profit of $65 million, or 3 cents a share, compared with a loss of $297 million, or 13 cents a share, in the year-ago period.

The cable company said that because it has withdrawn the Disney bid, it will proceed with a previously announced $1 billion stock repurchase program. Roberts said on a conference call related to the earnings that Comcast is reviewing some assets of cable rival Adelphia that could be a target down the road.

At least one industry watcher expressed relief that the Disney bid was withdrawn. David Mantell, an equity analyst at Chicago-based Loop Capital Markets, said he felt Comcast would have had problems overseeing Disney's vast entertainment business and getting the two companies' corporate cultures to work in unison.

"These are two very different businesses, and I've felt from the beginning that Comcast didn't have the expertise necessary to run a content business of this scale," Mantell said. "These are also two very different cultures, and I think a lot of people overlook the fact that you must have the right fit to pull off a buyout like this, and the chemistry wasn't there in this case."

Mantell said he would not be surprised to see Comcast move on to other acquisitions, but he believes the cable giant will focus on distribution rather than content. He said Roberts' mention of Adelphia indicated that Comcast would likely consider buying that company, or at least some of its cable systems.