NEWS: Image plays big in Comcast-Disney deal
No One
Image plays big in Comcast-Disney deal
Disney shareholders cannot imagine their company - and its
family-oriented face - under the control of a cable firm.
By Akweli Parker and Wendy Tanaka
Inquirer Staff Writers
The stock market isn't cooperating. Neither is the Walt Disney Co.'s
board. And two months after Philadelphia's Comcast Corp. launched its
bid to buy Disney, the biggest obstacle of all to a deal may be Disney's
mom-and-pop shareholders - folks who simply cannot imagine Disney in the
hands of a cable company.
"Any financial gain I would get from Comcast taking over Disney is not
worth losing everything Disney is - the Disney name, the Disney image,"
said Katrina Keller, a senior at West Chester University and a lifelong
owner of Disney shares.
"I always saw Disney as something different from any other business... .
Walt's vision of Disney World being a place to get away, all the family
values," she said. "Under Comcast, it might be just a random theme
park."
So far, Disney's board and shareholders have not been inclined to
consider Comcast's Feb. 11 bid for Disney very seriously, largely
because Disney's stock immediately rose above the value of the offer -
and has stayed there. Based on last week's closing prices, the stock
portion of Comcast's offer was worth $46.7 billion, about $7 billion
below Disney's market price.
For Disney's smaller shareholders, though, money isn't the only thing.
"The thing that's different with Disney that most people forget: So many
people are emotionally tied to this stock," said Robert Mittelstaedt,
vice dean of executive education at the University of Pennsylvania's
Wharton School. "People say, 'That's such an institution. Why would I
sell that stock?' If this were a chemical company, people would just
dump the stock."
While Comcast has been family-run for all of its 40-plus years, its name
does not conjure any of the fuzzy warmth that Disney does - partly
because of what the two companies do, and partly because of the cable
industry's legacy of indifference toward customers.
"There's no question, it's hard to put a face on a technology company,"
said Eugene Muscat, a professor with the University of San Francisco's
Graduate School of Management.
So as momentum for its bid has died down, Comcast has launched a broader
campaign to rehabilitate its public image, hiring Dallas ad agency the
Richards Group to position Comcast as a remade company focused on high
service standards and the benefits of new technology.
"We absolutely are committed to changing the way people think about
Comcast," said David N. Watson, executive vice president for sales,
marketing and customer service for Comcast Cable Communications,
Comcast's core division.
It has made progress, he said, pointing to numbers that show Comcast has
not only stopped the hemorrhaging of customers from the AT&T Broadband
cable properties it acquired in a 2002 deal, but has actually begun
adding customers in those areas.
In recent phone surveys with customers, 95 percent said they were
satisfied or very satisfied with their experience with the company,
Watson said.
Comcast has also retained Samuel Simon, president of Washington public
relations firm Issue Dynamics Inc., to reach out to consumer-advocacy
groups and monitor Internet postings about the company.
Lenny Stern, a founding partner of SS&K Public Relations in New York,
said public perception about cable companies is changing as more people
buy newer cable offerings such as fast Internet, high-definition
television and video-on-demand.
"Those changes have been about putting the customer in charge, letting
them do what they want to do, when they want to do it," said Stern, who
has worked with Comcast, Time Warner Cable and the National Cable and
Telecommunications Association on bolstering cable's image.
While service issues (Did the cable guy arrive on time? Is the picture
clear?) have been central to the cable industry's reputation, Comcast
and others in the industry also have faced criticism for some of the
programming they offer: violent or risque shows available on
pay-per-view channels, subscription networks, and regular cable
channels.
Dan Panetti, a vice president of the National Coalition for the
Protection of Children and Families, mentioned Comcast by name last week
in a statement about a crackdown on pornography by the U.S. Department
of Justice. "Will the DOJ prosecute a 'mainstream' company like Comcast
or Hilton Hotels for their involvement in the distribution of and profit
from hard-core pornographic material?" Panetti's statement asked.
Comcast said it has stepped up efforts to help parents protect children
from accessing adult-oriented programming.
"We don't want to limit people's choices but do want to give them to
tools to screen out material that they feel is inappropriate," Comcast
spokesman Tim Fitzpatrick said.
It should be noted that while many people associate the Disney brand
with wholesome entertainment, the company is much more complex than that
and includes movie studio Miramax - which produced the violent Kill Bill
films, among other non-kiddie fare.
Yet the disparity in the images of the two companies persists.
"The whole mystique of Disney is the magic," said Jeanne Cicero-Basla, a
Disney shareholder who lives in East Norriton.
That "magic," she said, was tangible in the customer service she got
last year at Disney World in Florida.
After a volcano canceled her trip to the U.S. Virgin Islands in
mid-flight, Cicero-Basla and her frazzled family tried to salvage their
vacation by going to Disney World instead. The Disney staff, she said,
was shockingly helpful.
"They didn't even know us, but they talked like they did... . They knew
we were distraught," she said.
Disney let Cicero-Basla stay in one of its hotels on a Sunday night
until things could get squared away the next day. "They didn't even
discuss payment of the room," she said. "That was good business."
If Comcast's bid succeeds, she wants to visit Disney World one more time
before the Philadelphia company takes ownership.
"I can't imagine Comcast keeping up that same level of customer service,
because they're all about the bottom line," she said. "I don't want to
go there and see Comcast billboards here and there and see these logos
all over the place."
Still, Comcast might salvage its reputation by exploiting its own
history as a family enterprise, said Muscat, the San Francisco
professor.
Muscat mentioned Johnson & Johnson and the Perdue poultry empire as
examples of mega-businesses that still trade on a folksy family image.
He said Comcast has made strides in the San Francisco area by improving
customer service and by making charitable donations in the former AT&T
Broadband territory.
"Comcast has come into the San Francisco market with an absolute passion
for changing the image of cable companies," he said.
Such passion, though, may not matter to such Disney shareholders as
Keller, who is convinced that Disney - having weathered the Comcast bid
and a shareholder revolt at its annual meeting in Philadelphia last
month - is better off without Comcast.
Keller was among the shareholders who gave a 43 percent vote of
no-confidence to Disney chief executive officer Michael D. Eisner at the
meeting. Some felt he had mismanaged the company and had not been a good
caretaker of the Disney image in recent years.
Eisner was stripped of the title of chairman of the board as a result,
but he remains CEO.
"I think things are settling back down," Keller said. "A lot of people
know about Disney now, and hopefully that will change some things in the
future for good."