USA Today Media Companies Article - Possible JK ME Head to Head?

[DisneyKidds]

Not sure if anyone read this yesterday. Short but interesting article that discusses the media giants and some of their motivations in playing the acquisition game.

However, the most interesting speculation is about Vivendi Universal and what it might do to shed some of it's debt load. The article points out that a Vivendi Universal entertainment spin off and combination with Dreamworks SKG would make sense. That JK competition might happen. What do you think?

http://www.usatoday.com/usatonline/20020708/4253667s.htm

 

[manning]

If it happens, ME and the board will have some serious thinking to do. The first, what to do with ABC. As the article says, the big play is in cable. I say get rid of it and focus on the core business, theme parks and animation.

 

[Bstanley]

Hmm, $6B for the Universal Theme parks and the studio...

If you wanted to focus the Big ME's attention on the parks as well as movies having JK in charge of Universal would certainly do it... It would be a classic 'Hollywood style' battle of egos.

Perhaps JK is already having enough fun making 'his' movies and doesn't need the 'aggravation' of being a mogul?

 

[Another Voice]

Barry Diller is the current head of Vivendi Universal Entertainment, the group that includes Universal Studios, USA Networks and other Vivendi entertainment assets. Mr. Diller used to run both Fox and Paramount (where he was Michael Eisner’s boss) and it’s long been rumored that he wants to play the Mega Media Mogul game again. Mr. Diller controls a large chunk of Vivendi stock and probably has more cash right now than Dreamworks does because of his recent sale of his USA Networks to Vivendi. He can buy back USA at a huge discount and use all that extra cash for Universal.

Another rumor going around town is that Vivendi may not be interested in selling Universal. The former CEO’s problem had less to do with his media empire and more to do about running it from New York instead of Paris. Vivendi really is the French government-owned water monopoly and one of its major media assets is Channel Plus, a strange combination of PBS and HBO that’s considered the bright shinning knight defending noble French culture from the invading dirty hordes of “those Americans”.

The former CEO had been very aggressive about adopting American business methods and American media philosophies. He also publicly criticized French content laws (meaning French theaters and channels must show a set percentage of shows made in France with French talent) and then fired the head of Channel Plus itself (because the place is losing millions and millions of dollars a year). Both moves were taken as an affront to French culture and to French pride. People are saying the Vivendi board and the French government want to maintain the Vivendi media assets provided they are sufficiently European. In other words, they want a Euro Major Media Empire to stand up to Hollywood.

It’s also interesting to note the last quarter results. Vivendi posted a 17% increase in income during the quarter. AOL TimeWarner, a media giant in a situation growing closer to Vivendi’s each day, posted a 7% increase. Disney on the other hand, posted a 2% decrease in income. The sad fact is that none of the big media companies are doing well right now and many people believe it’s a matter of time before they all fall apart.

Yes, all of them.

 

[DisneyKidds]

Yes, all of them.

Would that be such a bad thing? That is from a Disney theme park perspective and not a Disney stockholder perspective.

 

[larworth]

I didn't look at the particulars of any of the Vivendi deals, but assume most of these properties came at some reasonable premium over market. At some point one has to create some additional value to cover these premiums. While many of the units are indeed posting gains over last year it doesn't seem to be sufficient to address the new debt load they incurred. Sure sounds like there will be some divestitures, and would expect a more Euro centric entity to emerge.

The Diller buy-out sounds plausable. Anyone have a good read on what type of CEO he is. From the little I've read he does seem to have a genuine like for theme parks. Sounds as if he would be a willing invester and not a milker.

Is there a scenario where Vivendi break up Universal in a effort to raise some cash, but keep some US precence? Sell off seagrams, Universal music and distribution, keep the studios, cable etc?

 

[Walt's Frozen Head]

Would that be such a bad thing?

I certainly don't think so. It seems to me that the best hope feature animation and the parks (those are the aspects of Disney that mean the most to me personally) have for the future is to get themselves cut loose, somehow.

Even those hopes depend upon the philosophy of the new owner being more Walt-ish and less Eisner-ish.

I'd guess the answer to your question will come down to our individual speculation on the likely mind-set of the next muck-a-muck. Personally, I believe Eisner's mind-set is diametrically opposed to Walt's... therefore _any_ change in mind-set would be a step in the right direction.

-WFH

 

[Bstanley]

Forbes and Reuters are indicating that banks participating in the latest big loan to 'V' (1B Euros today, another 3B Euros on the table) were shown various plans to divest the company of subsidiaries to lower debt. No one knows at this point which of the plans might be more probable.

'AOL' is rumored to be getting ready to sell AOL/internet! But they just lined up a $10B credit line so who knows.

Both V and AOL bonds are being treated as 'Junk bonds', ie "don't expect to get all your money back"...

Both V and AOL have a book value substantially higher than their market cap...where are the corporate raiders when you need them ;-)

Disney financials actually look good compared to these characters...although interestingly enough the street thinks Disney stock is more over-valued than V or AOL - The 'Short Ratio' on Disney is almost twice V's and almost three times AOL's...curious. That indicates that almost twice as many professional stock folks think Disney's stock will go down in the next couple of weeks compared to V and almost three times as many people when compared to AOL.

 

[HB2K]

Even those hopes depend upon the philosophy of the new owner being more Walt-ish and less Eisner-ish.

Ei$ner's isn't inept in regards to theme parks. The Early part of the his tenure shows that. His main problem is trying to be successful in other ventures and he's using the theme parks to finance these ventures (ABC, ABCFAM, etc).

If Eisner only had the theme parks &/or feat animation to run, without trying to make other areas work, I think he could be successful. Maybe he wouldn't have the minimalist attitude since the theme park profits stay in that division?

I honestly don't know. I do know the main problem in Disney is how big they are.

 

[Walt's Frozen Head]

Ei$ner's isn't inept in regards to theme parks.

I consider Animal Kingdom and California Adventure to be business failures right now, because I believe Disney considers them in that light (I'll defer to Another Voice as far as trying to convince anyone else of that, should that be necessary. He has a lot more insider credibility on the board than your humble Headsicle). Further, I believe that one of the main reasons that AK and DCA failed to generate the results Disney had expected is that those two parks were designed and built within a framework that valued low cost more than high quality.

I agree that the parks, as a whole, are the aspect of Disney that have shown the fewest outward effects of that framework, and they are also the aspect of Disney where the decades old Magic is most highly concentrated and best preserved. But I still believe that framework is the main cause of Disney's recent financial struggles, and that it is certain to cause more of the same, the longer it exists.

Maybe he wouldn't have the minimalist attitude since the theme park profits stay in that division?

I suppose that's possible. It would certainly mean I'd have to adjust my concept of Eisner... I think "minimalist attitude" is a great term for Eisner's most concrete contribution to the company.

I also agree that Disney is currently too big for its own good. I would also suggest that a more robust framework would offer a lot more support for the media leviathan.

-WFH

 

[raidermatt]

I remember reading a quote from Roy O. Disney from the period following Walt's death, where Roy commented that they had no intention of letting themselves be taken over by a larger coroporation and "becoming part of that mess".

Well, they never did get taken over, but maybe they have actually become "that mess" themselves.

 

[YoHo]

While Eisner certainly has mucked up things by shuffling money. I doubt he would be successful with the parks.

It's moot anyway. Should a breakup happen, I doubt he'd be involved. probably just retire.