M-I-C ... See Ya Real Soon?

PHOTOGRAPHS FOR TIME BY CLARK MITCHELL/4G2

"Is this a good time to talk?" Brian Roberts asks. The CEO of Comcast, the largest cable company in the U.S., is on the phone for a quick interview before jetting off to meet with investors and pitch his latest gambit: a $66 billion hostile takeover of the Walt Disney Co.

He had just asked that very question, after a fashion, of Disney CEO Michael Eisner. "I asked Michael, did he see a scenario where we can do this together?" Roberts recalls of their phone conversation. He won't characterize the rest of their chat, although you don't have to be an Imagineer to know Eisner's answer. So Roberts, polite as ever, precipitated a takeover brawl that has Wall Street investment bankers and Hollywood power players salivating: the Cable Guy from Philadelphia vs. the Monarch of the Magic Kingdom. For Roberts, who started his career selling subscriptions door to door for his father's fledgling cable company, it is the boldest move of a 23-year run at Comcast. And it threatens the reign of Eisner, one of the information age's legendary moguls. "He will not go down without a fight," says Joe Roth, former chairman of Walt Disney Studios.

LATEST COVER STORY
Mind & Body Happiness
Jan. 17, 2004

SPECIAL REPORTS

Coolest Video Games 2004

Coolest Inventions

Wireless Society

Cool Tech 2004

PHOTOS AND GRAPHICS

At The Epicenter

Paths to Pleasure

Quotes of the Week

This Week's Gadget

Cartoons of the Week

More graphics >>
More photos >>

MORE STORIES
Advisor: Rove Warrior
The Bushes: Family Dynasty
Klein: Benneton Ad Presidency

More Stories >>

CNN.com: Latest News

Eisner, 61, took over a doddering Disney in 1984 and made it spout money. But since 1996, Disney has been sputtering. Eisner's outsize compensation, his somnolent board of directors and poor performances at ABC and Disney's theme parks and animation business have made him a target. Eisner's micromanaging style, imperious mien and inability to groom a successor all perfectly acceptable when you're coining money are now liabilities. Chief dissident Roy Disney, the founder's nephew, has called for his head, and Institutional Shareholders Services, an influential investor-advisory group, has recommended that its clients withhold their vote for Eisner at the company's annual shareholders' meeting next month.

Roberts, 44, keeps his ego in check and his checkbook handy. The trim, bespectacled executive is renowned as a shrewd bargain hunter and corporate strategist. "He's one of the most likable people, but whoever sits on the other side of the bargaining table should have a healthy dose of fear," says Terry McGuirk, vice chairman of Turner Broadcasting and a longtime friend. Roberts, an all-American squash player at the University of Pennsylvania, has a "black belt in strategy," says McGuirk.

That was certainly evident 15 months ago when Roberts bought AT&T;'s cable assets for $51 billion and promptly turned them from an albatross into a moneymaker. He recaptured or replaced subscribers lost under AT&T; management in 2002, boosted operating cash flow and upgraded the systems to make high-definition television available to more than 80% of subscribers ahead of schedule. With $18.3 billion in revenues in 2003, Comcast bills 21.5 million cable subscribers each month (out of 40 million potential customers in the areas it services) and, after unloading its stake in the QVC home-shopping network for $7.9 billion, has a balance sheet healthy enough to go at Disney.

Essentially, Comcast wants the Mouse House so it can control costs and ensure the supply of a nearly bottomless well of Disney movies, TV shows, sports and other forms of entertainment that Roberts now pumps through his TV and Internet plumbing lines. Yes, the deal would link a content powerhouse (Disney) with a cable and Internet king (Comcast)--a classic convergence play which makes investors skeptical, since they have been burned by other mergers premised on such a strategy. Yet when Roberts talks about a Disney coup, he doesn't use buzz words like synergies and digital transformation. The near term future of his industry isn't that mysterious.

An epic business battle is about to unfold, and Roberts doesn't want to be outgunned. Cable operators, Baby Bells, satellite companies and even utilities are assembling the resources to deliver video programming, phone service and broadband Internet access through a single pipeline to your home, one they all would dearly love to control. The goal: to sell you as many add-on services as they can, such as premium television, video on demand and pay-per-view sports.

Though the spotlight is on the duel between Roberts and Eisner, it was the maneuverings of another mogul, Rupert Murdoch, that helped provoke the fight. When his News Corp. empire bought control of the DirecTV satellite service last year, it gave Murdoch a pipeline for his programming and a hefty bargaining chip in negotiations with cable companies like Comcast over fees for his popular Fox channels. "If you want to build a new channel, you need to pass 40 million homes to break even," says Craig Moffett, a telecom-equity analyst at Bernstein Research in New York City. "Until Murdoch got DirecTV, that meant all roads led through Philadelphia." Murdoch's moves stepped up the pressure on Roberts to counterattack. Adding Disney would make Comcast the world's largest media conglomerate, with annual revenues of $45 billion and a market cap of $122 billion, about $40 billion to $50 billion more than its closest rivals, Viacom and Time Warner (TIME's parent company).