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Eisner dropped as chairman as critics persist

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   http://www.forbes.com/newswire/2004/03/04/rtr1286619.html

http://www.forbes.com/newswire/2004/03/04/rtr1286619.html

UPDATE 1-Disney critics persist, opinions split on Comcast bid
Reuters, 03.04.04, 12:49 PM ET

(Recasts throughout, adds bylines)

By Jeffrey Goldfarb and Derek Caney

NEW YORK (Reuters) - The removal of Michael Eisner as chairman of Walt Disney Co. has failed to quiet critics, leaving Wall Street divided Thursday as to the direction of Comcast Corp.'s $49 billion unsolicited takeover bid for the iconic media and entertainment empire.

Disney's shares traded slightly higher the day after it split the roles of chairman and chief executive following an unprecedented shareholder protest that saw more than 40 percent of voting Disney shareholders seeking to remove Eisner.

Investors were wary, however, since Eisner -- who has led the company for 20 years -- retained the post of chief executive officer. The chairman role went to George Mitchell, who himself received a 24 percent no-confidence vote from shareholders.

"I can't imagine a CEO who gets 43 percent of shareholder votes against him is still in his role the morning after," said Fulcrum Global Partners analyst Richard Greenfield. "You would think there would have been some discussion about removing him from the company all together."

After Wednesday's vote, Comcasturged Disney's independent shareholders to discuss the takeover proposal, but some observers think the deal is virtually dead.

"Comcast has shown and made statements recently that it is unlikely to significantly raise its bid, and without significantly raising its bid, this deal's unlikely to get done," said Mark May, an analyst at Kaufman Bros.

"Even if they were to raise their bid, the recent shareholder activism has shown that Disney shareholders want to see Disney succeed on its own," added May, who revised his rating on Comcast to "buy" from "hold" Thursday based on the unlikelihood of the deal occurring.

Comcast shares gained 29 cents, or 0.95 percent, to $30.69 in midday trading on the Nasdaq and Disney shares climbed 26 cents, or about 1 percent, to $26.91 on the New York Stock Exchange.

Comcast shares have fallen about 10 percent since the offer was disclosed last month while Disney shares climbed as much as 17 percent.

"Investors who have been acquiring Disney shares on the hopes of a higher Comcast bid or a quick exit by Mr. Eisner will be disappointed Thursday," Deutsche Bank analysts wrote in a note. They noted that they do, however, expect a new Comcast bid "in time."

Disney again Wednesday night rejected Comcast's offer, saying it would review any "reasonable proposal" with Mitchell now at the helm.



FROM SENATOR TO CHAIRMAN

Mitchell is a much-admired politician who served as majority leader of the U.S. Senate and helped broker peace in Northern Ireland. He has served as a presiding director at Disney, but has limited experience running a media company.

Fulcrum's Greenfield noted that compared with the chairmen of other media giants like News Corp.'s Rupert Murdoch, Time Warner Inc.'s Dick Parsons, Liberty Media's John Malone and Viacom Inc.'s Sumner Redstone, Mitchell would appear out of place.

"(Mitchell) obviously has credentials as a politician," he said. "But if you're at an investor conference and you've got a panel that includes Murdoch, Parsons, Redstone, Malone and George Mitchell, you've got to ask, 'Which one of these pieces doesn't fit?"'

"Someone needs to explain to me what Mitchell brings to the table," he said. "And if you can't answer that question, then you have to wonder if the move was cosmetic."

Recently departed Disney directors Stanley Gold and Roy Disney, the nephew of the company's namesake, who have led the upheaval against Eisner, said before the chairman/CEO split was even announced that Mitchell was unfit to be chairman.

"I don't think George Mitchell qualifies as a chairman of the board," Gold said Wednesday night after Disney's annual meeting.

"Not because I say so, but because the shareholders say so," referring to the percentage of investors who withheld their vote for Mitchell.

Copyright 2004, Reuters News Service


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