By Joseph Tsidulko
By Patrick Range McDonald
By David Futch
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By Dennis Romero
By Jill Stewart
By Dennis Romero
By Dennis Romero
Roberts is no day in the park, either. But the steely cable magnate is still at least human. Eisner, by contrast, is the beast that walks. Make no mistake: Eisner intends this fight to get dirtier than Bush vs. Kerry. He’s the Karl Rove of Corporate America, and it’s Florida 2000 all over again. He’s hired the sharpest lawyers and the savviest bankers and the stealthiest lobbyists to slug it out with Comcast. He’s disingenuously whipping up anti–Bigger Media frenzy against the cable giant. And he’s got myriad defenses at his disposal, all perfectly legal.
On Monday, Eisner’s still shamelessly insider board employed the Nancy Reagan defense — “Just Say No!”— when it unanimously rejected Comcast’s $48.8 billion offer as too low and reiterated blind support for Chairman Mao . . . er . . . Chairman Michael.
Next could come the Pac Man defense — “You gobble us? No, we gobble YOU!” — since right now the two companies’ stock prices are nearly equal. Then, there’s the Poison Pill defense (conceived by New York corporate lawyer Martin Lipton, whom Eisner just hired) — creation of a special class of stock designed specifically to ward off hostile takeovers by making the ultimate price tag much higher. Such a pill can both save a company and be deadly to it because it protects bad managers from shareholders.
It’s possible that Eisner may try a leveraged buyout. But everyone knows that Eisner is allergic to debt and had to be dragged kicking and screaming into the ABC deal back in 1995. He can look for a White Knight like Microsoft or Coca-Cola to come to his rescue, but help like that involves giving up control, which Eisner won’t tolerate.
Or he can just lay low. Conventional wisdom has it that, once a company is in play, it usually gets bought. But that may not hold true this time. The other infotainment companies, like Viacom, NewsCorp, and Time Warner, have too much debt on their books so they’re not in any position to put in a competing bid. Meanwhile, Congress and consumer groups (not to mention European regulators) are in no mood to see Big Media become Humongous Media so soon after the FCC’s media ownership expansion brouhaha, not to mention Nipplegate.
Then there’s Roberts’ own obsessive need not to be seen overpaying for any acquisition, even Disney. Hey, Wall Street still makes fun of Eisner for overpaying for the Fox Family Channel. That was only $5 bil.; now, multiply that 10 times, and you can sense Roberts’ dilemma. As long as Disney’s stock stays high, Roberts’ acquisition fever may cool. On Tuesday, Reuters quoted an anonymous source saying that has already happened: Comcast is not interested in sweetening its bid for Disney to match the current share price. The same source said Comcast is also leaning against running a shareholder-consent solicitation to replace all or part of Disney’s board while Disney’s stock price continues to trade at these higher levels.
On the other hand, this may also be just a tactical maneuver by Roberts knowing such news would bring down Disney's stock price and move up Comcast's. Which it did, predictably. Oh, the high-stakes games these rich kids play.
No matter what happens to Disney, and to Eisner, Disney President Robert Iger is the biggest loser of all no matter if the Comcast deal does, or doesn’t, go through.
Eisner is notorious for blaming everyone else except himself when things go sour. Just ask the long list of displaced persons among Disney’s executive ranks. So who’s to say that Eisner, and the board, aren’t going to look for a scapegoat and turn on “Teflon Bob”? If only Iger had turned things around at ABC, that money pit wouldn’t still be dragging down Disney’s earnings nearly 10 years after the deal was done. Iger also stood in for Eisner during the final stages of the Pixar negotiations, so it could be argued that he bears almost equal responsibility for that deal going south.
In fact, Iger increasingly has a “Daddy, what did you do in the war?” problem. As Eisner’s right arm, Iger can’t distance himself from Disney’s problems. Worse, as Eisner’s henchman, Iger has muddied his pristine Industry image as a “good guy.” And then there’s the problem that Steve Burke once worked for Iger, who sent off his underling with the snarky statement that Burke was leaving ABC and heading to Comcast because of a desire to be part of a “smaller, entrepreneurial operation.” With Burke’s help, Comcast acquired AT&T and now wants to make a dwarf of Disney. In short, even if he survives Eisner, Iger, the kid from the middle-class home on Long Island, is probably a goner.
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