'Alamo' Bomb Pressures Disney's Eisner
Mon Apr 12, 2004
LOS ANGELES (Reuters) - The Alamo lasted 13 days before Mexican troops overwhelmed it, but a dismal three-day debut was enough for many observers to label Walt Disney Co.'s $100 million "The Alamo" film a bomb and wonder if embattled CEO Michael Eisner would share the Texas mission's fate.
Some analysts said the box office defeat of "Alamo," which depicts the battle at the San Antonio outpost in 1836, might pave the way for high-level management changes and maybe even for Comcast Corp. (CMCSA.O: Quote, Profile, Research) to take over Disney.
"Depending on the size of the write-off and the pressure it places on earnings, the board could consider changes to management and the board itself, or invite Comcast in for productive two-way negotiations," said Richard Greenfield, an analyst at Fulcrum Global Partners.
But others argued that a Comcast deal was unlikely, regardless of the film's fate.
The movie about the men behind the battle of Texas independence from Mexico took in an estimated $9.2 million in its opening weekend, easily and embarrassingly topped by Mel Gibson's "The Passion of Christ," the comic-book adaptation "Hellboy" and tying comedy "Johnson's Family Vacation."
It cost $98 million to make and millions more to market.
Some analysts predict Disney (DIS.N: Quote, Profile, Research) will take a write-off of at least 1 cent per share for the second quarter ended in March -- a bad sign for Eisner, who is fighting of a shareholder revolt.
Disney's studio division has led the company in recent quarters but has had tepid showings with animated Western comedy "Home on the Range" and horse adventure "Hidalgo," two films which cost almost as much as "Alamo."
"You put that with all the other things going on, it's got to be putting pressure on Eisner and the board to do something," said independent analyst Dennis McAlpine.
"They could replace Eisner, give him certain deadlines to meet -- but then you get in to whom do you replace him with, or do you go to Comcast?"
DIFFERENT VIEWS ON COMCAST
Schwab SoundView analyst Jordan Rohan cut his profit forecast for the second quarter, ended in March, to 22 cents per share from 25 cents, citing expected movie write-offs.
But Rohan's new earnings target is still ahead of the 20-cent per share Wall Street average, according to Reuters Research, a unit of Reuters Group.
Shares of Disney fell 46 cents, or 1.77 percent, to $25.58, and Richard Greenfield, analyst at Fulcrum Global Partners, said the shares had not fallen farther because investors believed chances rose for a Comcast takeover that would profit Disney investors.
Not everyone agreed a deal was in the works, though.
The all-stock offer made by Comcast in February lags Disney's market value by $5.65 billion, or about $2 per share.
That is less of a difference than before, but Banc of America Securities analyst Douglas Shapiro predicted that the gap was unlikely to close and said that Comcast was "severely constrained" in its ability to raise its offer.
He wrote in a research note that Comcast was likely to abandon its bid for Disney, and he raised his rating on Comcast to "buy" from "neutral" on that premise.
Comcast shares rose $1.15, or nearly 4 percent, to $30.39.
Sanford Bernstein analyst Craig Moffett said a rise in Comcast shares on Monday reflected growing sentiment that a deal would not happen, but that conversely the failure of "The Alamo" could keep dim hopes alive longer.
"Had 'The Alamo' been a blockbuster it would have put Disney out of reach. With both 'The Alamo' and 'Home on the Range' posting disappointing opening weekends, its likely to leave Comcast's bid on the table longer," he said.
