Disney Rejects $60bn Comcast Offer and Backs Eisner's Leadership

Walt Disney yesterday rejected the $60bn (£31.5bn) hostile offer for the company made by America's biggest cable company, Comcast.

The entertainment and media firm also made clear its support for embattled chief executive Michael Eisner, who has become the lightning rod for criticisms of Disney's sluggish performance of recent years.

In a statement issued in the early hours of yesterday morning, the company said it would carefully consider any bids but added that the board had "confidence in the business, financial and creative direction of Disney under the leadership of Michael Eisner and his management team".

The rejection was widely expected. Shares in Disney were trading $3.60 higher than the offer price by the close of Wall Street on Friday. Halfway through trading yesterday, after the rejection, they rose another 48 cents to $27.40.

Comcast offered 0.78 of a share for each Disney share. But the Comcast price has dropped sharply since the bid was made last Wednesday, as the Disney share price has risen. The latter also made much of its improving results at an investor conference in Orlando last week.

A Comcast spokeswoman said shareholders should look at the Disney share price before it was lifted by the bid. She said the cable company remained convinced the offer represented a "full and generous valuation" that was a "significant premium over Disney's unaffected share price during any relevant measurement period over the past three years".

It remains far from certain that Comcast, which has a reputation as a disciplined buyer, will keep pressing until it wins Disney in a protracted takeover battle. The company walked away from the auction of the US entertainment assets of Vivendi Universal last year as the price rose.

Analysts have suggested that Comcast might need to add a cash element to sweeten the deal. Shareholders in Disney will be able to have their say in public on March 3 at the company's annual meeting in Philadelphia - coincidentally Comcast's home town.

The day before, the dissident shareholders and former directors Roy Disney and Stanley Gold will present the case for removing Mr Eisner and three other directors. The votes for Mr Eisner's re-election might give a clue to investors' stomach for the fight against Comcast.

Viacom, one of the handful of powerful media conglomerates in the US, yesterday became the latest to rule itself out of making a competitive offer for Disney.

Talking to the Wall Street Journal, president Mel Karmazin said the group, which owns TV network CBS as well as MTV and Nickelodeon, would not be "interfering" with the Comcast bid. "We don't feel there is a missing piece to our model or that we need to make an acquisition," he said.