February 11, 2004
Mr. Michael D. Eisner
The Walt Disney
Company
500 South Buena Vista Street
Burbank, California 91521
Dear
Michael:
I am writing following our conversation earlier this week in which
I proposed that we enter into discussions to merge Disney and Comcast to create
a premier entertainment and communications company. It is unfortunate that you
are not willing to do so. Given this, the only way for us to proceed is to make
a public proposal directly to you and your Board.
We have a wonderful opportunity
to create a company that combines distribution and content in a way that is far
stronger and more valuable than either Disney or Comcast can be standing alone.
To this end, we are proposing a tax-free stock for stock merger in which Comcast
would issue 0.78 of a share of its Class A voting common stock for each share
of Disney. This represents a premium of over $5 billion for your shareholders,
based on yesterday's closing prices. Under our proposal, your shareholders would
own approximately 42% of the combined company.
The combined company would
be uniquely positioned to take advantage of an extraordinary collection of assets.
Together, we would unite the country's premier cable provider with Disney's leading
filmed entertainment, media networks and theme park properties. In addition to
serving over 21 million cable subscribers, Comcast is also the country's largest
high speed internet service provider with over 5 million subscribers. As you have
expressed on several occasions, one of Disney's top priorities involves the aggressive
pursuit of technological innovation that enhances how Disney's content is created
and delivered. We believe this combination helps accelerate the realization of
that goal-whether through existing distribution channels and technologies such
as video-on-demand and broadband video streaming or through emerging technologies
still in development-to the benefit of all our shareholders, customers and employees.
We
believe that improvements in operating performance, business creation opportunities
and other combination benefits will generate enormous value for the shareholders
of both companies. Together, as an integrated distribution and content company,
we will be best positioned to meet our respective competitive challenges. We have
a stable and respected management team with a great track record for creating
shareholder value. In fact, our shares have consistently outperformed leading
stock indices by significant margins, including the S&P 500 by a margin of more
than 2 to 1 since Comcast went public in 1972.
The Comcast management team
greatly appreciates and is highly respectful of the Disney heritage. We know that
there are many talented executives at Disney who we envision would also play a
key role in managing the combined company. We also would welcome directors from
your Board joining our Board.
We have analyzed the issues associated with
regulatory approval and are confident that all necessary approvals can be obtained
in a timely fashion. Given the landscape that has evolved in our industry over
the past few years, the creation of integrated content and distribution companies
is essential to increasing the level of competition. The FCC's existing program
access and program carriage rules ensure that the combined company will continue
to make all of its satellite-delivered national and regional cable networks available
on a non-exclusive, non-discriminatory basis and that there will be no discrimination
against unaffiliated programming services, all consistent with the undertakings
made by News Corp. in its recent acquisition of DirecTV.
We hope that the
Disney Board will pursue the opportunity that this proposed combination presents
to your shareholders.
Very truly yours,
Brian L. Roberts
President
and Chief Executive Officer
