by Ray Keating
July 31, 2019
On July 31, 1995, the Walt Disney Company announced that it agreed to buy Capital Cities/ABC for $19 billion. At the time, it was the second largest U.S. merger in history, and the merged company became the largest entertainment company on the planet.
Following are some key points from the Los Angeles Times report at the time. These not only provide some interesting points about the merger, but also what the state of Disney was during that period.
• “The combination brings together the No. 1 television distributor and network and the nation’s premier producer of movies to create a one-of-a-kind global powerhouse with combined sales of $20.7 billion.”
• “The industry also congratulated Michael Eisner, the often risk-averse chairman of Disney, for stepping up to the plate after several rounds of warm-up talks with both ABC and CBS.”
• “In addition to a raft of characters that play well from Japan to Scandinavia--such as Mickey Mouse, Snow White and Donald Duck--Disney owns theme parks in the United States and abroad, a professional hockey team, 400 retail stores, a record and book arm, the Disney Channel pay TV service and a television and movie studio with a rich vein of hits that include ‘Pocahontas’ and ‘The Lion King.’”
• “Created in a merger in March, 1985, Capital Cities/ABC owns the most profitable network, eight of the best-managed television stations in the country--which reach 25% of the nation’s viewers--21 radio stations, the ESPN sports cable networks, a gaggle of trade magazines and interests in cable networks, including Lifetime and A&E. It has 225 affiliate broadcasters. Its newspaper group includes the Kansas City Star and the Ft. Worth Star-Telegram.”
• “The companies have something of a history together. Murphy talked about teaming up with Roy Disney Sr. years ago. In 1953, then ABC Chairman Leonard Goldenson helped finance Disneyland. Eisner landed his first job in 1969 at ABC Entertainment, and joked at the press conference about his scheduling of soap operas when he was a programming chief there.”
• “Under the agreement, Michael Eisner will remain chairman of Disney, with Robert A. Iger continuing as president of Capital Cities, which becomes a subsidiary of the Burbank-based company.”
• “Television executives say Eisner had gotten cold feet during talks in the past, worried that a major acquisition would weaken Disney’s stock price. The company, after all, had its fair share of bad news in the last few years, with its theme park outside of Paris flopping, plans for a park outside Washington scuttled and a series of bruising management defections taking their toll.”
• Analysts pointed to “another important asset of the Capital Cities purchase: a depth of management that can help fill the gaps at Disney left by recent departures.
Indeed, that management depth would lead to Iger succeeding Eisner at the Disney helm.
Ray Keating is the editor, publisher and economist for DisneyBizJournal.com, and author of the Pastor Stephen Grant novels. He can be contacted at firstname.lastname@example.org.
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