Investors Frown on Comcast Bid for Disney

Talks between Disney and Pixar recently ended, with Pixar saying it would find another partner after delivering two more films on its contract to Disney.

Cook said low-cost animated videos, such as the recent "Lion King 1 1/2," are enormously profitable. He also said that Disney's 2003 live action slate produced a return on investment of more than 25 percent.

Cook said the studio is planning two sequels to last year's hit "Pirates of the Caribbean," as well as animated sequels to movies such as "Lilo & Stitch" and "Bambi."

Disney also released strong first quarter earnings on Wednesday, which executives said was evidence the decisions made over the past few years by management are paying off.

The controversy over Eisner's leadership is not likely to disappear, however, as Comcast is expected to sweeten its offer and ex-Disney board members Stanley Gold and Roy E. Disney continue their fight to oust Eisner.

The two picked up some support in their effort to persuade shareholders to reject the election of four directors at the company's March 3 annual shareholders meeting.

Institutional Shareholder Services, an influential shareholder group, on Wednesday recommended against Eisner's re-election to the Disney board, citing "blurred" lines between the board and management.

Disney found the recommendation "inexplicable and unjustified with respect to Michael Eisner, since he led the very changes that resulted in a board dominated by independent directors," the company said in a statement.

Under the merger plan, Comcast said it would issue 0.78 of a share of its Class A stock for each Disney share, and Disney shareholders would retain 42 percent of the combined company. The offer valued each Disney share at $26.49, a 10 percent premium over their closing price Tuesday.

That's a relatively small premium for a takeover offer, but Comcast may be counting on the fact that other potential suitors in the media industry would surely face tougher regulatory scrutiny in Washington. Most of Comcast's holdings are in cable TV systems, while Disney's are in broadcast, cable and "content" businesses like movie studios.

In a sign that investors expect an extended fight, Disney's shares shot up $3.52, or 15 percent to $27.60 in very heavy trading on the New York Stock Exchange, above Comcast's current offer.

Disney and Comcast together had $45 billion in revenues last year. If a deal is reached to combine the companies, they would edge out Time Warner, which had $39.6 billion in revenues last year, atop the heap of media and communications companies.

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