Comcast ends its pursuit of Disney Co.

Company still looking, perhaps toward Adelphia


Comcast Corp. dropped its bid for the Walt Disney Co. yesterday, and Chief Executive Officer Brian L. Roberts said the Philadelphia-based cable company is "moving on," possibly toward an acquisition of bankrupt Adelphia Communications Corp.

Though the decision is a setback for Comcast, Roberts said the company "is in the best shape in its history," and he made it clear that he will continue looking for ways to expand.

"Our desire is to find attractive ways to grow," he said. "We have an enviable footprint that opens up opportunities."

Comcast's offer, made Feb. 11, had never been considered seriously by the Disney board, which rejected it unanimously Feb. 16 as too low. Disney's stock rose higher than the Comcast offer the day the bid was made, and Comcast decided not to sweeten the deal, which it defended as "generous" for more than two months.

"We told you from the outset we'd be disciplined and wouldn't bid against ourselves," Roberts said in a conference call with analysts and reporters.

He noted that Disney's board never showed any interest in discussing a merger.

Asked whether Comcast had misjudged the possibility of such a negative Disney reaction, Roberts said, "I think the only mistake was assuming the Disney board was going to talk with us. ... To that extent, we miscalculated."

Comcast made its bid while Disney's management - Chief Executive Officer Michael D. Eisner in particular - was dealing with a shareholder revolt led by former Disney board members Roy E. Disney and Stanley P. Gold, who complained about the poor performance of Disney's stock and finances in recent years.

The rebellion prompted the Disney board to strip Eisner of his chairman's title after the company's annual meeting in Philadelphia on March 3. The title was given to board member and former U.S. Sen. George J. Mitchell.

Disney's first-quarter results this year were solid, and despite disappointing recent movie releases The Alamo and Hidalgo, the Burbank, Calif., company has been predicting strong earnings growth for the rest of this year.

"I would applaud Comcast for being opportunistic, but the timing was off," said Aryeh Bourkoff, an analyst at UBS Securities LLC. "It would have been better a year ago, or a year from now when Comcast's stock is more stable."

Comcast stock rose 23 cents yesterday to $30.20 a share on the Nasdaq stock market, while Disney shares fell 23 cents to $23.95 on the New York Stock Exchange.

Roberts' ambitious deal-making over the past decade has turned Comcast into the No. 1 cable-TV company with more than 21 million customers, and Comcast has been mentioned as a possible buyer of all or part of Adelphia, which said last week that it might put itself up for sale, or the MGM movie studio, which Sony is angling to buy.

"The world keeps moving forward, and that's a new development for sure," Roberts said of the possibility that Adelphia, which has 5.3 million customers, might sell its assets. "I suspect we'll look at those."

He added, however, that "with almost 22 million customers, I think we're in the position where we don't have to make any acquisitions."

Roberts reaffirmed his confidence in Comcast's core business, which encompasses cable television, fast Internet access and, soon, telephone service. Comcast reported first-quarter earnings of $65 million, or 3 cents a share, yesterday, compared with a loss of $297 million, or 13 cents a share, for the first quarter of last year.

With the financial needs of a Disney acquisition gone, Comcast said it would proceed with a previously announced $1 billion stock buyback that had been shelved in January because of the pending Disney bid.

Observers said dropping the bid for Disney, which would have given Comcast control of such assets as movie studios, the ABC television network, ESPN and theme parks, was probably prudent.

Rob Sanderson, an analyst with American Technology Research, said the withdrawal of the bid was no surprise.

"There are still some holdouts on Wall Street who think that what Brian Roberts wants, he always gets," Sanderson said. "That's one view. That's not necessarily my view. ... What's more realistic is that shareholders were not for this, the Disney board was not cooperative, and it's best to move on, and enough is enough."

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