Walt Disney Co. May Bid for NBC in Multi-Billion Dollar Deal

Strategic Insights -

Walt Disney Co. has been believed to be interested in buying one of the Big Three networks for years, and speculation rose Wednesday that it may make a bid of as much as $5 billion for NBC and its seven TV stations. Despite having a policy of not commenting on speculation, Disney's spokesman John Dreyer has neither confirmed nor denied the rumors. Analysts believe that General Electric Co., the current owner of NBC, has retained investment bankers Allen & Co. to evaluate potential offers.

Key Takeaways:

  • Disney has long been believed to be interested in buying one of the Big Three networks, with NBC being a prime target due to its lower price tag and potential for a workable buyout.
  • Disney owns no cable properties and has little debt, making it a more attractive bidder than Time Warner Inc., which has a debt load of over $9 billion.
  • Time Warner Inc. is also considering a bid for NBC, but faces complex federal regulations and a need to find a way to circumvent them, as it owns cable properties in the same markets as NBC.
  • Other players rumored to be considering bids include ITT Corp., Harcourt General, and Turner Broadcasting System.
  • NEC, under GE's ownership, is valued on its books at $4 billion, with some analysts believing it could be sold for as much as $5 billion.
  • The major networks have been experiencing a resurgence in financial performance recently due to an upturn in advertising rates, leading to widespread speculation that a big deal is forthcoming.

Statistics:

  • The potential bid for NBC by Disney could be as high as $5 billion.
  • Time Warner Inc. has a debt load of over $9 billion.
  • NBC is valued on its books at $4 billion.
  • The network has seven TV stations.
  • The end of the federal restrictions limiting NBC, CBS, and ABC from owning and syndicating programs is expected by the end of next year.
  • Disney is a major producer of network programming, with shows such as "Home Improvement."

Sources:

  • Burbank, Calif., Sept. 14, Burbank Journal.
  • Allen & Co.
  • Time Warner Inc.
  • General Electric Co.
  • ITT Corp.
  • Harcourt General
  • Turner Broadcasting System
  • Burbank, Calif., Sept. 14, The Wall Street Journal.