Did Comcast CEO Brian Roberts just Stop! Or My Mom Will Shoot Bob Iger?
That statement requires more explanation:
Starring in 1992’s Stop! Or My Mom Will Shoot was one of the worst decisions of Sylvester Stallone’s career to that point (Rhinestone being another), and it all happened because of Arnold Schwarzenegger’s lies.
Back in the early 90s, the future Planet Hollywood business partners were locked in a real dick-measuring contest whereby every inflated movie salary, record-setting box office performance, and over-the-top body counts were pieces in the larger competition for the title of biggest movie star in the world. They were constantly competing for the same roles and battling each other in the press. So, Arnold used that to his advantage. The Stop! Or My Mom Will Shoot script was terrible, and he wanted nothing to do with it. Still, he concocted a lie about how he was keen on doing the movie for the right, rather exorbitant price and fed it to the press. The producers went to Stallone instead, figuring they could get him for cheaper, and he took the bait, walking straight into a box office bomb gift-wrapped for him by the Terminator.
Such stories are hardly unique in Hollywood, where competition is fierce and career sabotage lurks around every corner.
Is that’s the kind of thing Comcast CEO Brian Roberts and Disney’s Bob Iger are engaged in right now?
Obviously, a professional rivalry between two roided out 90s movie stars who were commanding salaries in the mere twenty million dollar range is nothing compared to the multi-billion dollar brewhaha over 21st Century Fox which has broken out between Roberts and Iger. After all, you don’t bid $65 billion for Fox, as Roberts did earlier this month, if you’re not at least kind of serious about it. Plus, 21st Century, with its rich film & TV content and sports channels, is certainly an objectively desirable asset.
Still, there have been repeated whispers in the business and industry trades suggesting this fight is oddly personal, not the mere whims of the ridiculous rich but instead, a giant game of dudes in six-figure suits more or less yelling “Oh, no you don’t, you sonofabitch!” at each other.
“Iger would rather lose Mickey Mouse’s right arm than lose Fox to Comcast,” a management consultant recently told THR.
But, why? How did Brian Roberts and Bob Iger turn into the Katy Perry and Taylor Swift of the entertainment CEO world? They’ve clearly got bad blood, but who made the first really deep cut?
To find the answer, we have to go all the way back to 2004, a time when George W. Bush was President, there were Blockbuster Video stores around every corner, and Netflix, Google, and other future tech behemoths were the new kids on the block. Iger, a former weatherman turned ABC executive, had ascended the Disney corporate ladder to become Michael Eisner’s right-hand man, holding the titles of President and Chief Operating Officer since 2000. Within a year, he would finally succeed Eisner, but in 2004 Disney was still Eisner’s baby, for better or worse.
The one-time savior of the Mouse House had been driven egotistical in success and thus increasingly sloppy in execution, leaving Disney a shell of its former self. Profits were a third lower than they had been just 6 years earlier. Accordingly, the share price was at its lowest level in 7 years.
Worse yet, Eisner aggressively pushed out any dissenting voices, leading to a shareholder revolt spearheaded by Roy Disney. The studio’s iconic animation department had been allowed to atrophy, mostly outsourced to Pixar. Even that was about to end since Eisner continued to butt heads with Steve Jobs in the go-nowhere negotiations to somehow keep Pixar in the Disney family after its contract expired with the production of Cars.
Brian Roberts, a Forbes 400 billionaire whose father Ralph founded cable company Comcast in 1969 and eventually appointed him President in 1990 when he was just 31, smelled blood in the water. As The Economist explained in February 2004:
“WITH viciously perfect timing, Comcast, a cable-TV company, last week launched a hostile takeover bid for The Walt Disney Company, arguably America’s best-known entertainment company. Comcast is taking advantage of a particularly weak point in Disney’s history. Last month Disney’s most important business partner, Pixar, an animation studio, abandoned it. At the end of last year, two board members, Roy Disney and Stanley Gold, resigned and started a campaign to oust Michael Eisner, Disney’s boss. On the day that Comcast announced its bid, Disney’s executives started an investor conference in Florida, an occasion they had counted on to boost the company and its share price”
From Roberts’ viewpoint, vertically integrating cable distribution and content creation through a combined Comcast-Disney made perfect sense given the state of the competition. Time Warner already had Warner Bros. Rupert Murdoch’s News Corp. had just bought DirectTV a year earlier. Moreover, Disney’s sky high carriage fees for channels like ESPN had been irritating the cable providers for quite some time. This way, Comcast could just buy them out and be the one charging the competition through the teeth for ESPN.
Small problem: Disney wasn’t actually for sale. Roberts was attempting to initiate a hostile takeover, betting he could throw enough cash/stock at the Disney board to get them to turn on Eisner and hand over the company. It actually worked. Kind of. Eisner was temporarily forced from his position as chairman of the board after 45% of shareholders voted against his re-election to the board, but he later managed to regain support. Throughout it all, the board still expressed little interest in negotiating with Roberts.
Comcast was barely mentioned at the investor conference in Florida the day the bid came in, and the board formally rejected the offer several days later. Two months later, Comcast officially abandoned its pursuit of Disney. Roberts attempted to spin it as no big deal, but it was a sound defeat for a fiercely competitive man who just a year earlier had thrown down $47.5 billion to acquire AT&T Broadband. Michael Eisner, Bob Iger, and the Disney board denied him an even bigger victory. To make matters worse, Iger then executed the corporate revival at Disney Roberts had hoped to do himself, and then Iger got to turn around and charge Roberts way too much to carry ESPN, signing a lucrative 10-year carriage contract in 2012, which is right before ESPN’s numbers started crumbling.
Of course, Roberts eventually got his vertical integration wish, purchasing NBCUniversal in 2011, and he’s made no secret of his attempt to copy the Disney playbook – “family animation, theme parks, and consumer-products businesses.” That’s how he ended up buying DreamWorks Animation in 2016.
According to The Wall Street Journal, at one point last fall he thought he was on the cusp of adding 21st Century Fox to the mix. Serious negotiations took places. Terms were exchanged and an offer was made. Comcast was just waiting for Rupert Murdoch and Fox to hand over some promised business data. Suddenly, though, they encountered total radio silence. No one at Fox would return their calls.
Then a couple of weeks later Roberts and his crew woke up to the following headline:
Damn. That’s cold. Just completely ghosted. Worse yet, Disney’s all-stock offer was for $12 billion less than Comcast’s all-cash offer (there are tax considerations, of course). WTF, Rupert Murdoch? Roberts, according to the WSJ, took it personally, confiding in a friend, “I don’t know what more I could do.”
He must have felt a slight sense of deja vu. Disney was buying Fox for $52.4 billion. 14 years earlier, Comcast’s final offer for Disney was $54.1 billion. Aww, hell no. If Roberts can’t have Fox Iger doesn’t get to buy it for just $52 billion. Let the bidding war begin.
So, after the Justice Department’s attempt to block the AT&T-Time Warner merger failed Comcast formally offered $65 billion for the Fox assets. Disney responded by raising its offer to $71.3 billion in cash and stock, a 36% increase over its opening bid. Comcast is expected to counter, and analysts predict the bidding will eclipse $80 billion.
This all a huge win for the Murdochs when you consider the following: as of 2 years ago, 21st Century Fox was worth just $44 billion. Rupert reportedly personally prefers Iger to Roberts, which has Roberts to lead a character assassination campaign, painting Iger as untrustworthy and lacking a clear line of succession should he leave the company. This has understandably irked Iger and drudged up memories of 2004.
The Murdochs, for their part, are said to be willing to simply go to the highest bidder, but Disney is the clear favorite, if only because the Roberts family’s owns one-third of Comcast stock whereas Disney has no majority shareholder. So, if Fox goes to Disney, the Murdochs would have a larger say in the company than they would if it goes to Comcast.
Of course, when Roberts found about that he was so incensed he went out and tried to buy Sky, as a side way into the deal, hoping to maybe salvage a split of the 21st Century Fox assets with Disney. To this point, both Disney and Fox have been resistant to that idea.
This is unfamiliar territory for Iger. While his acquisition streak is legendary in Hollywood, it’s comparatively small potatoes to Roberts track record. Iger’s additions of Pixar, Lucasfilm and Marvel add up to less than $16m; Roberts more than doubled that when he bought NBCUniversal and nearly tripled it when he bought AT&T Broadband. So, he’s used to these high stakes bidding wars, and even if he loses he will have succeeded in forcing Iger to overpay.
It’s not all because of what happened in 2004, but a lot of it is. This isn’t quite a full Stop! Or My Mom Will Shoot Situation. Roberts isn’t completely playing Iger like Arnold and Sly, but the rivarly is all the same.
Sources: Wall Street Journal, Economist, Wharton,