Whenever you’re dealing with a major change on the horizon, people get scared. It’ a perfectly natural reaction: we as humans naturally fear change if we internally deem it happening too fast or the results being too radical. The idea that Comcast could come in and in one swipe literally buy the Walt Disney Company sent shivers down the spines of a lot of people. With the shivers came fears and rumors; many of which we touched on last week.

I would bet that the group needing the most chiropractic medicine right about now would have to be the Walt Disney Company Cast Members (employees). As we mentioned last week, the Cast Members have a special bond with the Walt Disney Company, as not only do they earn their living by making someone else’s day magical through their actions, but they represent a long line of “descendents” that have carried the torch of the Walt Disney Company’s history and ideals, starting back in the days of Walt and Roy.

We mentioned last week that there is a fear among Cast Members that a in a merger or takeover not only could they lose their jobs, but they would give the responsibility for the Walt Disney Company “family” to an outsider. We also mentioned the economic fears of local communities in which the Walt Disney Company has operations, as well as the emotional and control fears that have circulating in the Disney fan and Disney patron circles. While all of their concerns are valid, I think that almost all of these groups, the Cast Members, tourism community locals, Disney fans, and Disney patrons, have to count their blessings when it comes to their concerns actually panning out, assuming the deal goes through. They may have a brighter future in a merger than they think.

For starters, the first group of concerns stems around the possible idea of when (if) Comcast plans and implements its transition with the Walt Disney Company, many people will lose their jobs. The logic behind this is fairly straight forward. Let’s look at an example, shall we?

Let’s say that due to foreign competition, the Ford Motor Company has agreed to a deal where they will merge with General Motors. That’s a far, far stretch for the imagination, but for our purposes it’ll work. Since General Motors is such a large company, we’ll assume that they are the ones technically buying out the Ford Motor Company. Let’s call the new company GM Ford.

Now, Both GM and Ford need to look at their business units, since this merger was formed due to increasing competition, the new GM Ford will probably want to cut back on its vehicle lines. Let’s look at a comparison of what they have, based upon very loose categories. These category names are by no means meant to be accurate representations of the product lines; just enough description to help us understand for this example:

Product Line Category	GM Product Line	Ford Product Line
“Ultra Deluxe”		Aston Martin,Jaguar
“Deluxe Adventure”	Hummer	Land Rover
“Deluxe”	Cadillac	Lincoln
“European Engineering”	Saab	Volvo
“Deluxe Everyday”	Buick
“Eclectic”	Oldsmobile	Mercury
“Heavy Duty”	Chevrolet*, GMC	Ford*
“Performance”	Pontiac	Mazda*
“Import-Like Efficiency”	Saturn	Mazda*
“Everyday”	Chevrolet*	Ford*

Based on the above categories, you’ll see that both GM and Ford have something to offer each other. Right away you’ll notice that Ford has two brands in the “Ultra Deluxe” category, while GM doesn’t have any. At the same time, GM has one brand in the “Deluxe Everyday” category while Ford has none. It is important to also keep in mind that some of these brands (like Ford) have products that transverse these categories.

Now the idea of a merger like this is to come out with a stronger product offering while cutting costs at the same time. In our example, since both companies have product lines in most categories, it wouldn’t be a bad idea to consolidate each category into one product line. This will, in effect, shut down some factories and design centers, but not all. Let’s be radical here and say that GM Ford wants to cut all costs and product lines by half. If that’s the case, they may cut until only one product line is left standing in each category. In some cases, such as the “Eclectic” category, the brands may stay intact due to their emotional appeal and brand strength. In that case, each product line itself would probably get cut by half.

Now, onto Comcast and Disney. Let’s look at the same type of comparison, shall we?

Business Line	Walt Disney Company	Comcast
Feature Animation	Walt Disney Feature Animation
Motion Picture	Walt Disney Pictures, Miramax, touchstone
Broadcasting	ABC, ABC Radio
Cable Channels	Toon Disney, ESPN, ABC Family, Disney Channel, A&E, Biography, Lifetime, SoapNet, History Channel	Outdoor Life Network, E!, Style, Golf Channel, Comcast SportsNet, Comcast Spectator, G4, TVNE
Internet Assets	Walt Disney Internet Group	Comcast.net
Theme Parks & Resorts	Disneyland Resort, Walt Disney World, Disney Cruise Line
Consumer Products	Buena Vista Home Entertainment, Disney Consumer Products, Walt Disney Records, Disney Store
Cable Subscription Services		Comcast Networks
Internet Access Services		Comcast Broadband, Comcast Dial-Up
Phone Access Services		Comcast Digital Phone Service

See the difference in the above comparison versus our GM Ford example? In the Comcast/Disney comparison, there aren’t that many business units which are in the same category. That’s the blessing for Disney I was talking about.

In other words, where in the GM Ford example entire business units would be cut and merged under one name, we have completely different business units in the Comcast/Disney example. This is of course with the exception of the cable channel and Internet assets, but even then, most are in completely different categories. If there are two closely linked, one is clearly dominant over the other. For the most part, Disney is in the content business, and Comcast is in the distribution business.

In the real world, this means that there probably wouldn’t be much downsizing (a.k.a. layoffs) in a Comcast/Disney merger. In our GM Ford example, almost every product line would experience cuts or even eliminations because both companies are in the same business, and have developed competing product lines in specific categories over the years. Luckily, the Walt Disney Company and Comcast are NOT in the same business, so a possible merger wouldn’t really affect the majority of employees (those on “the front lines”) too much…in theory.

One snag in this deal, however, is that every company does have a handful of identical business units. These are mainly the administration-level units such as executive management, accounting, finance, corporate human resources, etc. The idea here is that since the new company will have two identical departments, one can be completely eliminated to save costs. While this looks good on paper, this does eventually mean that jobs will be cut. Unfortunately for those in these units, no matter what company is being mentioned as a suitor they will always feel the pinch of downsizing during a merger. The fact is that every company has these departments. Of course the good news is that the majority of employees don’t work for corporate, so most will not be affected by cuts in these areas.

This deal would be DRAMATICALLY different if say, Vivendi Universal was to merge with the Walt Disney Company. There you would be trying to merge directly competing theme parks, production companies, internet assets, and other business units together. That merger would not be pretty, as many people would lose their jobs in these competing business units. In a way, it’s a good thing that Comcast has offered a bid, instead of some other company that may be a direct competitor of Disney.

What this all means is that, despite what the Cast Members, locals and everyone else fear, we are all pretty lucky in the fact that Comcast is not in the same business as the Walt Disney Company. They do not have people who know how to run theme parks successfully, or create beautiful animation. Nor does Disney know how to efficiently run a cable, Internet, or telephone access distribution business. If this deal goes through they will probably leave their own people where they are, and those of the Walt Disney Company where they are.

The second group of concerns stem from the idea that if Comcast buys (“merges” with) the Walt Disney Company, they will have the right to do whatever they wish with the entities of the Walt Disney Company. This could mean splitting core business units apart (such as Feature Animation and Theme Parks & Resorts), or even possibly selling one or more off to the highest bidder.

I will admit that this idea is what scares me the most. By looking at the comparison chart again, one can easily see that Comcast and Disney both have a lot of cable channels. Who’s to say that Comcast wouldn’t rip them all out from under the Walt Disney unit (including Toon Disney and the Disney Channel)? Once they have what they want (assuming that is those assets exclusively), they could sell off every other Disney asset separately. Think of the chaos which would ensue if DreamWorks owned Walt Disney Feature Animation, Comcast owned the cable channels & ABC, Yahoo! owned the Walt Disney Internet Group, Paramount owned Walt Disney Pictures, and Vivendi Universal owned Disneyland and Walt Disney World? This can become complicated and confusing very quickly, and there would be nothing stopping Comcast, unless forbidden somehow through legal or governance means.

The good news is that, Disney has a history. Sure, every company has a history, but the Walt Disney Company has a history; namely a history with America. Let’s face it, if Mickey Mouse had not been so adored by the American public, the Walt Disney Company would have never come into being…and that’s by Walt’s own admission (i.e. “It was all started by a mouse”). That history, or rather the fusing of Disney history with American history, is probably the strongest ally to the Walt Disney Company if this deal does go through.

Comcast almost can’t touch any asset of Disney without the public, and media, breathing down their neck. It would almost be like Toyota buying and wanting to pull Coca-Cola out of Atlanta: it would be a devastating public relations disaster with the American public.

At the very least, Comcast can’t touch the traditional business units of the Walt Disney Company. They may be able to separate the parks, animation, and product units away from the media interests and get away with minimal negative press, but can you imagine the public backlash if they tried to break up animation from the parks? The press would have a field day with headlines like “Comcast sells the “magic” out of the Magic Kingdom” and “The Princesses have left their Castles”. While some would argue that such a large corporation wouldn’t care what the public thought, negative press like that still damages their brands and credibility. If Comcast is so quick to sell off a brand that my family has trusted for years, why should I continue to buy their products and expect them to have the same concern for my family that the old Walt Disney Company did? In the end, the bottom line gets hit, and I mean hard.

Something not mentioned yet was the possibility of prices rising, which unfortunately, will most likely happen (given that the deal goes through). It’s the same reason a Coke is $2.50 in the Magic Kingdom; all of the distribution for that Coke you want is owned by Disney, so if you want the Coke, you will have to pay their asking price. If not, you just don’t get it. Same goes for a combined Comcast/Disney. If you want to watch Toon Disney, you’re going to have to pay whatever price they ask for it. Think you can get around that by not subscribing to Comcast? “I’ll get DirecTV” you say? Think again. Since Comcast would own Toon Disney, DirecTV would have to pay whatever they wanted to carry it on their satellite networks.

That’s why we had the recent fiasco with Comedy Central and other channels warning that Dish Network customers would soon lose those channels. Viacom, who was the owner of those channels, threatened to drop the channels from its line up since Viacom wanted too much for access to them. Viacom, having the upper hand, ran a small ticker on the bottom of their channels stating that if you were a Dish Network customer, you would be losing that channel soon if you didn’t call Dish Network and tell them how much you love the channel(s). What happened in the end? Dish Network decided to keep the Viacom channels.

The end result in a Comcast/Disney merger could be the same. They would be perfectly free to raise prices gradually over time. Chances are they would be successful at it. Of course, traditional business logic states that a consumer will only pay what he or she feels the product is worth. You would decide if an increased price would be worth it.

Getting back to our Disney fears, the good news is that the two main concerns, job sustainability and content quality, could survive to live another day (or merger!). The key word in that sentence was could. Just because it probably wouldn’t happen, doesn’t mean that it couldn’t. I wish I could say the same for stable content prices, but C’est La Vie.

I definitely need to say here that while this article does dispel some fears previously encountered, its writing shouldn’t be taken (by any means) that I support a takeover or merger of the Walt Disney Company with Comcast. While Disney does need some major changes (of which I outlined my plan for in the “What in the ‘World’ is going on around here?” series), I still believe that the Walt Disney Company is best left by itself.

But that begs the question, what would be an acceptable situation for a merger? Is there any plan for consolidation that could work? What would that new company look like? Well, you’ll be able to find out what I think would be a “best case scenario” for a new Comcast/Disney company next week, in part three of this series. It’s then that I’ll lay out my plan for a combined Comcast and Disney that could actually work for both of them. Until then…

Thanks for stopping on by, and I’ll see you next week!