Comcast, America's largest cable TV company, today launched an audacious and hostile takeover bid to buy the Walt Disney company in a deal worth £35bn.
Should Comcast pull off its takeover attempt, the cable giant would join the world's elite group of media companies to rival Time Warner, News Corporation and Viacom.
The announcement, which came out of the blue, is proposing one of the most spectacular marriages of a distribution company and a content company since the merger of AOL and Time Warner in January 2000.
It emerged today the cable giant had been trying to negotiate a deal privately with Disney, but its offer was rejected outright.
Comcast said it had decided to appeal directly to shareholders and make its unsolicited proposal public after Michael Eisner, Disney's chairman and chief executive, declined to enter discussions. Comcast's timing is impeccable as Disney is under pressure from dissident shareholders.
Disney is one of the world's biggest and best known media companies, and is responsible for everything from Mickey Mouse cartoons to blockbuster movies such as Toy Story. It owns a string of cable TV channels, the ABC TV network and the ESPN sports network.
Mr Eisner has come under attack from Roy Disney, Walt Disney's nephew, and his associate Stanley Gold. They resigned from Disney two months ago and have been calling for Mr Eisner's head. Mr Eisner, once one of Wall Street's most admired executives, is looking vulnerable as Disney's share price has dropped to levels not seen since 1996.
In the latest setback for Disney, the company failed to renew a distribution deal with Pixar, the computer and animation studio that contributed to the success of Disney's film arm with hits including Finding Nemo and Toy Story.
Disney yesterday accused its critics of waging a "misleading and distorted" campaign against the company and said it had begun a succession plan for Mr Eisner.
Comcast is America's largest cable company with 21.3 million subscribers and had been looking for some time to team up with a company that could provide content to its network of viewers.
Speculation about Comcast's ambitions arose last summer after it hired former Universal Studios boss Frank Biondi as a consultant.
It made a bid to buy Vivendi's entertainment assets but pulled out because it felt the cable channels Sci-Fi and USA networks were overvalued.
The company has been upgrading his digital services and will be trying to buy content to provide on its networks, which offer broadband and video on demand services.
Comcast's surprise move was announced on the firm's website.
"This is a unique opportunity for all shareholders of Comcast and Disney to create a new leader of the entertainment and communications industry," said Brian Roberts, the company's president.
"Not only would this merger create significant shareholder value, but it would also position the combined company to compete vigorously with other entertainment and communications empires," he added.
Comcast, whose other assets include The Golf Channel, Outdoor Life Network and Style, also released a letter sent to Eisner indicating that Eisner had personally rejected Roberts' offer to enter into discussions about a merger earlier in the week.
The letter from Roberts called it "unfortunate" that Eisner was not willing to enter into discussions. "Given this, the only way for us to proceed is to make a public proposal directly to you and your board," the letter stated.
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