Shares jump on Comcast upping bid rumor
A spike in shares of Walt Disney helped drive the broader market higher Friday, reversing four days of hefty losses.
Mouse shares jumped 4.6% to $26.10, driven in part, analysts said, by a rumor early in the day that Comcast was prepared to boost its Mouse bid by $5 in cash per share.
A Comcast spokeswoman declined to comment. Wall Streeters, however, tended to dismiss the speculation. “I don’t know where it started. But from what I can tell, it’s erroneous,” said analyst Rich Greenfield of Fulcrum Global Partners.
But, he noted, the move drives home the fact that Disney’s stock “right now is a function of what Comcast does.”
Disney, the only media conglom that’s part of the Dow Jones Industrial Average, well outpaced the overall market. The DJIA rose 1.1%.
Comcast up 1.5%
Comcast shares closed up 1.5% at $24.49 — an unlikely outcome if the cabler were about to announce a significantly richer offer.
The Philadelphia cabler is widely expected to come back with a second bid for Disney after the first one was rejected as lowball. Disney prexy Bob Iger said as much at a media conference earlier this week, commenting that another move by Comcast seems inevitable. Comcast brass has been swearing up and down the block to its nervous shareholders that it won’t break the bank in a Disney deal.
While a number of analysts are cautious on Disney stock long term, others have been outspoken bulls. In a report Thursday, William Drewry of Credit Suisse First Boston said Disney was his top pick in the media and entertainment sector “based on increasingly positive operating momentum building in almost all of its major business lines.” Disney reported robust results last quarter and will likely see a strong 2004.
While Michael Eisner’s role in the company remains contentious, ousting him would be a costly and onerous prospect if the board continues to be solidly behind him as chief executive.
Disney’s uptick was also part rebound, after it and just about all of its media peers took a beating for most of last week, mirroring the broader market. Investors were spooked early in the week by a disappointing employment report and, on Thursday, by the bomb attacks in Madrid.
Also Friday: Viacom rose 1.11% Friday to close at $38.30; EchoStar nosed up 0.37% to $35.48. Shares of the two companies had been roiled by a dramatic carriage dispute they settled Thursday.
News Corp., Wall Street’s darling with its newly enhanced DirecTV distribution muscle, rose 1.07% to $35.80.
Time Warner gained 1.57% to close at $16.85. Investors are still waiting for the final word on an AOL turnaround and an end to federal probes.