- The Washington Times - Tuesday, February 17, 2004

PHILADELPHIA (AP) — A day after its offer to buy the Walt Disney Co. was rejected as cheap, cable TV giant Comcast Corp. refused to budge on its unsolicited all-stock offer, saying it reflected a fair valuation of the iconic media company.

“Any time over the last three years, our proposal represents at least a 10 percent premium” to the shares’ market value, said D’Arcy Rudnay, a spokeswoman for Philadelphia-based Comcast. “The proposal, we think, reflects a full and generous valuation … and what’s key is Disney’s prospects and performance over a long period of time.”

In rebuffing Comcast on Monday, Disney noted that the offer to swap 0.78 of a share of Comcast for each Disney share — originally worth $54 billion — undervalued the company by $6.6 billion based on last week’s stock prices.

Disney stock last week jumped from about $24 per share to more than $28 after Comcast made its offer — an increase of more than $8 billion. At the same time, Comcast’s share price fell, reducing the value of its all-stock offer.

Analysts said Comcast needs to discount the stock price jump and wait several weeks before making another offer. Disney and Comcast had combined 2003 revenue $45 billion; if the two companies agreed to merge, they would surpass Time Warner Inc., which had $39.6 billion in revenue last year.

“I think that they wait to … see what happens with the Disney stock price, to see if it settles down to the pre-offer levels,” said Thomas Eagan, an analyst with Oppenheimer & Co.

Comcast’s original offer was worth $26.49 a share to Disney shareholders. Davenport and Co. analyst Drake Johnstone expects the nation’s largest cable company to raise that offer — but not immediately and not by much.

“I’d be surprised if they raised that offer more than another 10 percent or so,” Mr. Johnstone said. “I’m not expecting them to come in and take Disney at $35 a share.”

Late Monday, Disney’s board rejected Comcast’s offer but left open the possibility that it would sell for a higher price.

A person familiar with the Comcast offer, who spoke to the Associated Press on the condition of anonymity yesterday, said the cable giant wasn’t interested in paying current market prices to acquire Disney, which owns ABC, ESPN, movie studios and theme parks.

Disney stock fell 2 cents to close at $26.90 on the New York Stock Exchange. Comcast shares gained 85 cents to close at $30.75 on the Nasdaq Stock Market. Based on that price, the offer is worth about $49 billion.

The Disney board yesterday tried to counter recent attacks by ex-board members and urged shareholders to give Disney’s board, including Chairman Michael Eisner, their full support.

In a letter sent to all Disney shareholders yesterday, the board blasted the “distractive propaganda campaign” being waged by Stanley Gold and Roy E. Disney, who both resigned from the Disney board last year and have been seeking Mr. Eisner’s ouster.

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