Verizon May Target Disney for Takeover

By Douglas A. McIntyre Updated Jan 12, 10:30AM EST · Published Jul 2, 7:31AM EDT

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Verizon Communications Inc. (NYSE: VZ) is considering Walt Disney Co. (NYSE: DIS) as a takeover target, according to The New York Post. The huge telecom company and wireless carrier has already snapped up AOL and Yahoo! as part of a plan to consolidate content assets, particularly those which contain video. The move would also allow Verizon to keep up with AT&T Inc. (NYSE: T), which recently bought Time Warner Inc. (NYSE: TWX).

The Post reports:

One rumor making the rounds last week was that Verizon may be eyeing a Disney purchase. While that sounds fantastical, a well-placed banker told On the Money not to count Verizon out.

On the Money is a New York Post section.

Among the challenges Verizon faces is that Disney may not want to be taken over. Its long-time CEO Robert Iger has spent years aggressively increasing the profitability of the company’s assets, which include film studios; cable operations, led by ESPN; and theme parks.

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Verizon may not want large parts of Disney, particularly its theme park operations. It would have to sell these off as part of any M&A deal. Iger has not been able to slow the slide of ESPN which has lost millions of subscribers as people drop cable and fiber services and use their broadband connections to pick and choose which channels they want.

There are rumors that Disney wants to make acquisitions of its own. One of those rumors is that Netflix Inc. (NASDAQ: NFLX) is among its targets. The content rental company has a large library of digital content. It also has a distribution network of tens of millions of subscribers which matches the largest cable companies in size.

Finally, there is the issue of price. Disney’s market cap is $106 billion. Presumably, Verizon would have to pay a large premium. Verizon’s market cap is $182 billion, which makes a stock buyout nearly impossible. The deal would need to be a merger.

The buyout rumor is just that. But, with AT&T’s deal for Time Warner, Verizon may believe it has to respond.

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.