Comcast Drops Designs on Disney

Comcast has withdrawn its multi-billion-dollar offer for the Walt Disney Co. after the entertainment giant’s board refused to discuss a merger.

The largest cable TV and high-speed ISP in the United States said a marriage would have created “one of the world’s leading entertainment and communications companies with an unparalleled distribution platform and an extraordinary portfolio of content assets.”

But Disney CEO Michael Eisner was unmoved, and despite the fact that some in the company are disenchanted with his leadership, the board did not break ranks. Disney’s intransigence prompted Comcast president and CEO Brian Roberts to abandon the plan.

“We have always been disciplined in our approach to acquisitions,” Roberts said in a statement. “Being disciplined means knowing when it is time to walk away. That time is now.”

Industry watchers and investors applauded the move.

“Comcast’s action is yet another testimony to the management’s financial discipline and we would expect the company to exercise similar discipline should it pursue other opportunities in the future,” Merrill Lynch analysts wrote in a research note to investors today.

In addition to walking away from Disney, Comcast also posted a strong first quarter financial results. Revenue was up nearly 10 percent to $4.9 billion and earnings jumped 21 percent to $1.7 billion.

In the first three months of the year, Philadelphia-based Comcast added 35,000 basic cable subscribers, 192,000 digital cable customers and 394,000 high-speed Internet accounts.

“We’re excited about the performance in all levels of the company,” Roberts said on a conference call with analysts.

He added that emerging technologies such as Voice over Internet Protocol and video on demand would likely be two growth areas in 2005 and that the company is working to be sure its infrastructure can support the services.

Analysts at SG Cowen said the company’s results were in line with their expectations and said Comcast’s stock will see a near-term boost because of the Disney decision. A $1 billion stock buyback program announced today should also help.

However, shares could hit a ceiling “due to concerns about increased competition from satellite and (regional telecom carriers),” SG Cowen said.

Shares of Comcast were up 42 cents, or 1.4 percent, to $30.39 per share at midday.