Investors Frown on Comcast Bid for Disney

ORLANDO, Fla. - Comcast Corp. astounded the financial world with its offer for The Walt Disney Co., yet the cable television giant now faces a daunting task in selling the blockbuster combination - and investors have already indicated the proposed price is too meager.

Analysts said Disney board members and the financial community are both looking for extremely sound reasons, beyond financial and management abilities, why Comcast believes the acquisition would work.

"Therefore, while there could be merits in combining content with distribution, we do not believe these are overwhelming, as we have seen with a company such as Time Warner which has yet to really show the inherent benefit of marrying content and distribution," Jill Krutik, an analyst at Citigroup Smith Barney wrote in a note Wednesday.

Moreover, two days of meetings between Disney executives and financial analysts at Walt Disney World are likely to reinforce the idea that Disney is on the right track and that Comcast management have yet to offer enough specifics on what they would do differently, some analysts said.

"Looking more closely, the numbers aren't there," said Harold Vogel of Vogel Capital Management, who is attending the analyst meeting, which began Wednesday and was overshadowed by Comcast's bombshell.

Vogel said Disney managers are making progress toward key goals, including improving the ratings at its ABC Television network.

Combining content, such as Disney's ESPN network, with distribution, like Comcast's cable subscribers and high-speed Internet customers, could make sense, but Disney has shown it is able to find customers for its content without owning its own cable system or satellite television network.

Disney executives are saying little about the offer, but have begun to outline its plans for boosting the company's earnings by double digits each year through 2007.

Chief executive Michael Eisner said the Disney board met Wednesday and asked management to perform an in-depth analysis of the proposal so the board could evaluate it. Eisner did not say how long the analysis would take.

Wednesday night, Dick Cook, chairman of the Walt Disney Studios, told analysts he was confident the studio would be able to produce popular animation for the big screen and home videos even after Pixar Animation Studios ends its Disney deal in 2005.