Cable Operators

Analyst: Comcast May Drop Disney Bid

4/12/2004 9:43 AM Eastern

Comcast Corp. stock rose nearly 4% ($1.13 each) to $30.37 per share Monday after Banc of America Securities LLC cable analyst Doug Shapiro upgraded the stock, claiming that the MSO will soon drop its unsolicited bid to buy The Walt Disney Co.

Comcast made its unsolicited offer for Disney in February, which Disney promptly rejected as being too low. Since then, Disney’s stock has risen on the hopes that another buyer would step in.

Comcast stock had been as high as $30.53 each Monday, up $1.29, or 4.4%. Disney finished the day down 58 cents each (2.2%) to $25.67 per share.

Shapiro upgraded Comcast to "buy" from "neutral" Monday, setting a $41-per-share 12-month price target.

"We are increasingly convinced that Comcast will ultimately abandon the Disney bid," Shapiro wrote, adding that the spread between Comcast’s offering price and Disney’s actual stock price is unlikely to close soon.

Comcast has always said that it could walk away from the Disney bid, which is currently valued at about $23.69 per Disney share, some 8.4% below its Monday close.

However, other analysts expect Comcast to play a waiting game, hoping that after Disney releases its fiscal second-quarter results next month, the stock may come back down to previous levels.

Shapiro said he believes Comcast is looking for an excuse to walk away from the deal, pointing to Comcast’s upcoming first-quarter results -- slated for release April 28 -- and Disney’s second-quarter announcement as catalysts.

But while Shapiro saw reasons for Comcast to walk away from the deal, Fulcrum Global Partners LLC analyst Richard Greenfield said poor box-office performances by two Disney studio blockbusters could encourage the media giant to bring Comcast to the negotiating table.

Disney’s $100 million epic, The Alamo, tanked at the box office over the weekend, bringing in only $9.2 million. Earlier in the month, a Disney animated film, Home on the Range, had equally disappointing box-office results.

Greenfield said the below-average showing of the films could cause investors to believe that the fiscal second quarter will be weaker than expected and could lead to one of two scenarios: changes in the board of directors or management, or renewed discussions with Comcast.

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