Comcast bids £36.5bn for Disney

SHARES of Walt Disney soared as dealers speculated that today's stunning $66bn (£36.5bn) hostile approach from Comcast could trigger a bidding war for the company that owns some of the world's best-loved movie assets.

Viacom, News Corp and even Microsoft were mooted as possible alternative merger partners for Disney, whose assets range from movie-making to the ABC television channel and theme parks.

Disney shares rose from $24.08 to $28.05 while Comcast stock fell slightly on news of the approach. Comcast, America's biggest cable TV operator with 21m subscribers, is offering $26.47 a share in newly-issued stock.

Comcast chief executive Brian Roberts said the merger 'would 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'.

It was 'unfortunate', he wrote to Disney chief Michael Eisner in a letter published today, that he rejected the approach earlier this week. 'Given this, the only way for us to proceed is to make a public proposal directly to you and your board.'

Roberts, a canny dealmaker, used a similar unsolicited 'bear hug' ploy against AT&T Broadband, which he successfully bought for $72bn in 2002.

Today's attack appeared deliberately timed to maximise Disney's discomfort, coming as media analysts gather in Disneyworld in Florida for a two-day investment conference hosted by Disney. The company, while not immediately commenting on the approach, rushed out first-quarter figures today that revealed a strong bounce in profits.

Roberts claimed the Disney deal would increase competition and argued that it would clear regulatory hurdles. The Federal Communications Commission and anti-trust watchdogs will be closely scrutinising any Disney takeover.

The approach brings to a head the simmering row over the future of Eisner, who has come under intensive fire from Roy Disney, the former vice chairman and nephew of the eponymous founder.

Analysts said Comcast's offer at only a 10% premium would have to be lifted to have a serious chance of success. Timothy Ghriskey of fund managers Ghriskey Capital said : 'The Disney board is under tremendous pressure from Roy Disney and his supporters, which would indicate that it may be receptive to this buyout offer.'

Tough chief with a giant pay packet

MICHAEL Eisner became chairman of Disney in 1984 with the blessing and support of Roy Disney, the founder's nephew, as part of an attempt to turn the company's flagging fortunes round, writes Richard Thomson.

Trained as a lawyer, Eisner, now 60 and chief executive, had spent much of his career in TV. With the help of Frank Wells, who became Disney president, he energetically began rebuilding the Disney brand and reviving the theme parks. Over the next 10 years, company profits soared and Disney's corporate valuation rose more than tenfold.

Eisner set a remuneration record in 1997 when he exercised $570m (£304.7m) in stock options on top of his basic salary and multi-million dollar bonus.

When the company's fortunes slumped again in 1999, he took home more than $11m. Critics say his pay continues to rise while Disney's stock has floundered - and he still has hundreds of millions of dollars in unexercised options.

Eisner has a reputation for driving out potential rivals. Since the mid-1990s, Disney has struggled and Roy Disney's frustration with Eisner's leadership erupted into open opposition last year. Eisner retaliated by ousting him from the board.