Buying network is a logical step, say analysts
Tuesday 01 August 1995
There was cautious applause in Hollywood for the sale of Capital Cities- ABC to Disney.
"It's going to take weeks to sort this out, nobody can see how this is going to shake out yet," said Art Murphy, a columnist at the Hollywood Reporter.
"It does expand Disney from a major position in the theatrical entertainment business to a major position in the broadcast television business."
"It's an extremely good deal for both parties," says Harold Vogel, an analyst at Cowen & Company in New York.
"It makes a lot of sense and they don't overlap except for one television station in Los Angeles."
Currently, Disney has access to television programming only through it's pay-per-view Disney Channel. The acquisition of ABC will now give Disney an important position in the cable business with ABC's A&E and ESPN channels.
Analysts agree that it is logical for Disney to have a network but warned that it could not be programmed alone by Disney without affliated production companies.
"Disney will not be able to run only Disney programmes and it will not be able to simply shut off one of three major historical networks to other television companies for competitive, political and financial reasons," said Mr Murphy.
The deal has ended speculation that Disney was interested in buying EMI music.
Analysts say yesterday's surprise announcement will put more pressure on rival CBS to make a deal with a programmer - a need that its current potential buyer, Westinghouse, does not offer.
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