Tremors in media land over Comcast's bid for Disney

MUMBAI: Following the $66 billion unsolicited bid made by US cable TV biggie Comcast for the Walt Disney Company yesterday, many developments have come forth from various bodies in the US.

First and foremost, the two companies' share prices were affected after the announcement. While the share prices of Comcast fell ; that of the Walt Disney Company saw a rise on the stock market.

The deal, if it comes through, would create a new rival to Time Warner and also to Rupert Murdoch's News Corp. In a separate conference called yesterday, Murdoch was asked if the regulatory approval of a Comcast-Disney merger would clear the path for him to go after EchoStar Communications Corp. Murdoch replied in the negative and was quoted in media reports saying that he was not interested in making a bid for Walt Disney.

Comcast president and CEO Brian Roberts said at a news conference in New York yesterday that he had not talked with any Disney board members or shareholders, including Roy Disney. Roberts further said that the ball was in Disney's court and they had to take a call on it. Disney chief executive Michael D Eisner, who rebuffed Roberts' request for merger talks earlier, had no comment on the offer, which the company said it would "carefully evaluate." The directors of Disney further said that there was no action for shareholders to take in the meanwhile.

The possible merger would also face intense regulatory scrutiny from the Federal Communications Commission (FCC) because of the combined company's potential to squeeze customers. The FCC's longstanding rules on media ownership were meant to guard against such threatening combinations. The perceived danger was that the gatekeepers for the viewer's television screen could be in a position to dictate information and entertainment choices.

Keeping this in mind, the federal government barred any company from owning more than one broadcast network and barred networks from owning cable systems, or too many stations, either nationally or in a single market. But reports say that because both companies have little overlap, the deal was likely to be approved by the FCC. FCC chairman Michael K Powell promised that "a merger of that magnitude will undoubtedly go through the finest filter at the commission as is possible."

One media report quoted the Center for Digital Democracy executive director Jeff Chester as saying, "It's clear that Brian Roberts knows no limits to his media ownership ambitions. That Comcast would make the announcement the same day that a federal Court of Appeals in Philadelphia is holding a crucial hearing on new FCC media ownership policies suggests that they are out of touch with how millions of Americans - who opposed the recent ownership changes - feel about further media consolidation."

According to a media report, a Comcast-Disney merger would need regulatory approval on two fronts. One is an antitrust review, conducted either by the Federal Trade Commission or the Department of Justice. The second review will be conducted by the FCC on the more nebulous ground of the public interest.

Owing to all this, the Walt Disney Co. reported improved fiscal first-quarter earnings that exceeded Wall Street expectations on the strength in its film business and improved TV networks and theme park trends yesterday following the announcement of the bid. Disney's net income for the fiscal first quarter rose to $688 million from $36 million a year ago. Excluding the effect of an accounting change, the year-ago figure would have been $107 million. The revenue rose 19 per cent to $8.55 billion. The results were declared by the company yesterday morning rather than after the market close -- as originally planned -- as investors started the day focusing their attention on Comcast's unsolicited bid for the Mouse House.

In another development, Comcast struck a deal with programming guide provider Gemstar -TV Guide International Inc. worth $250 million for licensing its program-guide technology on account of which Gemstar's shares soared yesterday. The deal includes a one-time $250 million cash licensing payment from Comcast to Gemstar, as well as the creation of a joint development group controlled by Comcast to develop interactive programming guides for cable operators.

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