Comcast bid for Disney running into trouble

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The Independent Online

Disney shareholders are bracing themselves for counter bids to emerge next week for the media empire under siege from a hostile bid from the cable television group Comcast.

One option being talked about on Wall Street, however, is Disney reversing the tables and launching its own counter bid for Comcast.

Were Michael Eisner, the Disney chief executive, to adopt the so-called Pac Man defence - named after the computer game - it would create as big a sensation as Comcast's original bid for Disney. But analysts believe it cannot be ruled out as one of Disney's possible defence strategies.

"It is as likely as any of the other bidders being touted around," said Angela Kohler, a media analyst with Federated Securities Corporation, the US fund management firm. Potential rivals for the Magic Kingdom are expected to spend the long President's Day weekend preparing their own offers to counter Comcast's all-share bid which was unveiled on Wednesday.

Putative bidders mentioned by analysts include Time Warner, Pixar, Viacom, Liberty Media and even Microsoft, although several of these would face stiff regulatory hurdles and would be forced to make material disposals of existing TV interests before being allowed to buy Disney. Disney already owns the ABC television network, a string of cable channels and the ESPN sports network.

Although a Pac Man counter bid for Comcast would probably struggle to find support among Comcast shareholders, Mr Eisner has already referred to the possibility.

Asked by an analyst on Thursday about the company's acquisition strategy, Mr Eisner joked: "Acquisitions? Oh, we're buying Comcast. No, terrible answer. Turn off those cameras."

In answer to questions over whether Disney needed to join a distribution company such as Comcast, Mr Eisner said: "There are great distribution companies, there are great content companies. They can be together. They don't have to be together. We feel we're running a pretty good company as it is."

Comcast's shares continued to fall yesterday, ending down 16 cents at $29.90. Its stock has fallen by 12 per cent in the three days since it unveiled its bid, wiping more than $6bn off the value of its all-share offer. Although Disney shares fell almost 4 per cent yesterday, they have gained 12 per cent since the offer was revealed and are still trading above the offer price. Comcast's proposed takeover deal, including the assumption of almost $12bn debt, was worth $60bn last night.