Comcast Corp. withdrew its $54.1 billion bid for the Walt Disney Co. yesterday, ending its ambitious quest to create the world’s largest media conglomerate through a hostile takeover.
The Philadelphia cable TV giant’s decision to drop its bid is expected to provide Disney’s embattled chief executive officer, Michael Eisner, with some breathing room in his ongoing struggle with two former directors trying to oust him.
Brian L. Roberts, Comcast’s president and chief executive officer, said buying Disney no longer makes “financial sense” because its shares have risen above Comcast’s offer price. Since Comcast made the bid Feb. 11, shares in the cable company have fallen 12 percent, and some investors have worried Mr. Roberts would pay too much for Disney, the world’s second-biggest media company behind Time Warner Inc.
“We have always been disciplined in our approach to acquisitions. Being disciplined means knowing when it is time to walk away. That time is now,” Mr. Roberts said.
Comcast stunned Wall Street when it made the bid, and it turned conventional wisdom on its ear because the bid marked the first time a cable provider tried to acquire the parent of a major broadcast network. Disney owns ABC, as well as several film studios and theme parks and it has a significant stake in ESPN, A&E and other cable networks.
Comcast, which has 21.4 million cable subscribers, offered to swap a 0.78 Comcast share for each share of Disney. On Feb. 16, the Disney board of directors rejected the offer as too low.
“It has become clear that there is no interest on the part of Disney’s management and board in putting Comcast and Disney together,” Mr. Roberts said.
Shares in Comcast sold for $29.06 when trading ended on the Nasdaq Stock Market yesterday, up from Tuesday’s closing price of $28.85. Disney shares, which trade on the New York Stock Exchange, sold for $23.95. The previous day’s close was $24.18.
“Brian Roberts doesn’t get to wear his Mickey Mouse ears, and I don’t know if we’ll see another effort like this again,” said Gary H. Arlen, an independent media analyst.
Comcast is interested in acquiring content providers, but few are available right now, he said.
“The pickings are pretty clean. Brian’s challenge will be deciding what kind of content he needs to feed to his pipeline,” Mr. Arlen said.
Other analysts suggested Comcast could target Viacom Inc. — the parent of CBS, MTV, Nickelodeon and several other networks — or NBC, a subsidiary of General Electric Co.
Mr. Roberts’ failed offer is the largest hostile takeover attempt in which the target remained independent, according to Bloomberg News data. Some analysts say Comcast could resurface with another offer later, especially if Disney continues to be plagued by internal management squabbles and the lackluster performance of its movie studios and ABC network.
Kurt Funderburg, an analyst at Harris Associates LP, told Bloomberg that Comcast could make another offer later. Harris, a Chicago investment firm that manages $37 billion in assets, owned 1.07 million shares of Comcast as of December.
“If it could be done at a lower price or sometime in the future when people are more focused on the value of content, it could work,” Mr. Funderburg said.
The withdrawal buys some time for Mr. Eisner, who is fending off calls for his ouster from former directors, Roy E. Disney and Stanley P. Gold. Disney’s board said late Tuesday, after a two-day strategy session, that it has “complete confidence” in Mr. Eisner, a decision that helped seal Comcast’s decision to abandon its efforts to acquire the company.
“That doesn’t surprise me, because the board is very supportive of Eisner. I don’t think anyone considers it an independent board,” said Drake F. Johnstone, an analyst for Davenport & Co. LLC, a Richmond investment bank.
In March, after 43 percent of shareholders withheld their votes for Mr. Eisner at the company’s annual meeting, Disney’s board stripped him of his title as chairman. The board turned those duties over to George J. Mitchell, a former senator and one of Mr. Eisner’s allies. Mr. Eisner and his senior managers remain in firm control of the company, according to Harold Vogel, chief executive officer of Vogel Capital Management.
“This is probably one of the better days of the year for Mr. Eisner. He undoubtedly must feel more secure,” Mr. Vogel told the Associated Press.
Yesterday, Mr. Gold and Mr. Disney criticized the board for supporting Mr. Eisner. “New leadership is the best way to improve value for the Disney shareholders,” the two said in a statement.
With Comcast out of the picture, analysts said Disney’s challenge is to deliver the promised 40 percent growth in earnings per share this year and fix problems in its animation unit and at ABC, which shuffled its managers last week in an effort to lift its sluggish prime-time ratings.
Disney reports its earnings May 12. Improvements at its theme parks and ESPN are expected to be strong enough to make up for weakness at ABC and its film studios, which have stumbled recently with disappointments such as “The Alamo” and “Home on the Range.”
Comcast reported net income yesterday of 3 cents a share compared with a loss from continuing operations of 16 cents a share, or $355 million, a year earlier.
The cable company also said it will revive a plan to buy back $1 billion of its shares, a program it suspended after it made its bid for Disney.
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