Comcast Spurns Disney in Final Hour

Gretchen Gallen
BURBANK, Calif. – The two-month long troubled courtship between Comcast and Walt Disney Co. appears near the end, although no official statement has yet been released.

Philadelphia-based Comcast made a hostile bid of $54 billion for Disney in February that gave way to weeks of public contention and indifference, mainly from the Disney board of directors who snubbed the deal from the get-go.

One of the nation's largest cable television providers with 22 million subscribers, Comcast is also a major distributor of porn movies, adult channels, and pay-per-view programming.

Disney, in the midst of its own internal restructuring, received pressure from advocacy groups that disapproved of the family entertainment icon merging with a company that made a significant portion of its revenue from porn.

Comcast earned an estimated $50 million from porn last year alone.

Many analysts speculated that the merger had the potential to lay the groundwork for one of the largest media conglomerates in the world, outside of AOL/Time Warner. Although Comcast refused to increase its bid for the Mousketeer, which was reportedly the reason that further negotiations failed to take hold.

There are reports that Comcast plans to announce the dissolution of the deal within the coming week around the time of its quarterly earnings report or during the next shareholder meeting slated for May.

The company is also considering announcing a stock buyback and possibly a shareholder dividend to coincide with the announcement that it is pulling out of its bid for Disney.

Comcast had originally cast its hat into the acquisitions ring in an effort to align itself with a major content provider and make its move into the highly lucrative video-on-demand market. Efforts to blaze a trail into what is expected to be one of the hottest cable and Internet sectors have been so far stymied by Comcast's inability to forge relationships with mainstream networks and media content providers.

By owning the lion's share of Disney content, Comcast would have been poised to parlay video-on-demand and high-speed content delivery into a successful and hugely profitable business unit.

There are also reports that after straying from the deal with Disney, Comcast is considering an alliance with either Metro-Goldwyn-Mayer or Adelphia, which went on the sale block last week. MGM has been flanked by potential corporate suitors since December after the beleaguered movie studio hits the skids. The former icon of the Golden Age of Hollywood holds a library of more than 4,200 titles, considered one of the largest studio libraries in existence.

MGM's most recent bidder has been Time Warner.

Sony Corp., Texas Pacific Group, and Providence Equity have also been in been in negotiations with MGM.

On the heels of announcing its bid for Disney, Comcast saw a spike in its share value, however, in recent weeks, Disney shares have outpaced Comcast's, which have taken a dip in value.