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Television broadcasting industry

Walt Disney Rejoins Ranks of Companies Eyeing Acquisition of NBC

Strategic Insights

— 2 min read

Walt Disney chairman Michael D. Eisner is reportedly seeking to acquire NBC, with some media experts estimating the deal could cost as much as $5 billion. The move would be a significant departure for Disney, as it would allow the company to own a television network and produce its own programming. Industry analysts believe that the Federal Communications Commission's rules on cross-ownership between cable companies and television stations will soon change, making it easier for Disney to acquire NBC.

Key Takeaways:

  • Walt Disney chairman Michael D. Eisner is in discussions to acquire NBC, with estimates suggesting the deal could cost up to $5 billion.
  • The acquisition would be a significant departure for Disney, allowing the company to own a television network and produce its own programming.
  • Industry analysts believe that the Federal Communications Commission's rules on cross-ownership between cable companies and television stations will soon change, making it easier for Disney to acquire NBC.
  • Disney does not own cable systems, which gives it an advantage over Time Warner in negotiations with NBC.
  • Television networks are not currently permitted to produce and sell rerun rights to their shows, but this rule will be phased out by November 1995, making it easier for NBC to acquire and produce its own programming.
  • Disney has relatively little debt, which is another advantage over Time Warner in negotiations with NBC.
  • Disney's chairman, Michael D. Eisner, believes that studios need alliances with networks in the future, making the acquisition of NBC a strategic move.
  • Industry analysts call mergers between movie studios and networks a logical step, and many believe that all three major broadcast television networks will make alliances with studios in the next several years.

Statistics:

  • Estimated cost of acquiring NBC: up to $5 billion
  • Projected operating profits of NBC this year: $400 million
  • Projected revenues of NBC for this year: $2.5 billion to $3 billion
  • Current debt of Disney: relatively little
  • Number of years until Federal Communications Commission's rules on cross-ownership change: several years
  • Percentage of NBC's financial performance not broken out by General Electric: not applicable

Sources:

  • According to several executives close to the negotiations, as reported in "The Walt Disney Company Joins the Ranks of Companies in Discussions to Acquire NBC".
  • Mr. Eisner's potential willingness to spend up to $5 billion on acquiring NBC, as reported in "The Walt Disney Company Joins the Ranks of Companies in Discussions to Acquire NBC".
  • Industry analysts' estimates of NBC's operating profits and revenues for the year, as reported in "The Walt Disney Company Joins the Ranks of Companies in Discussions to Acquire NBC".
  • The Federal Communications Commission's rules on cross-ownership between cable companies and television stations, as reported in "The Walt Disney Company Joins the Ranks of Companies in Discussions to Acquire NBC".
  • Mr. Eisner's belief that studios need alliances with networks in the future, as reported in "The Walt Disney Company Joins the Ranks of Companies in Discussions to Acquire NBC".
  • Industry analysts' predictions of future mergers between movie studios and networks, as reported in "The Walt Disney Company Joins the Ranks of Companies in Discussions to Acquire NBC".

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