Disney shares climb as investors bet on a sweeter bid or new suitor

Shares of Walt Disney Co. kept climbing yesterday as Wall Street wagered that either Comcast Corp. will be forced to sweeten its $50 billion bid for the fabled entertainment empire, or another bidder will step up to best Comcast.

But even as Disney shares gained another 1.5 percent to close at $28, up 18 percent from their close before Comcast's Wednesday takeover bid, industry analysts struggled to envision just who could emerge as a plausible, deep-pocketed alternative to the Philadelphia cable giant.

News Corp.'s Rupert Murdoch said he has no interest in bidding for Disney, and yesterday told leading Italian newspaper Corriere della Serra that "Comcast will succeed . . . They will have to pay more than they have offered, though."

Because Disney already owns the ABC television network, CBS owner Viacom Inc. and NBC owner General Electric Co. would likely face potentially prohibitive antitrust obstacles in making a bid for Disney, analysts said. NBC also is already pursuing an acquisition of Universal Studios' US operations.

US media giant Time Warner Inc. is generally discounted as a possible Disney buyer because it is still working through the wreckage of its disastrous $165 billion merger with America Online. Microsoft Corp.'s name regularly surfaces as a media or cable buyer because of the software giant's $52.8 billion cash horde, but its $3 billion Comcast stake could complicate or dissuade any Microsoft challenge to Comcast.

On most analysts' lists, that leaves two entertainment companies that are both much smaller than Disney: Liberty Media Corp., led by former cable television tycoon John C. Malone, and InterActive Corp., parent of Home Shopping Network, whose chief executive, Barry Diller, is one of the few Hollywood friends of embattled Disney chief executive Michael D. Eisner. With Disney now worth $57.3 billion -- compared to Liberty's $33.2 billion market capitalization and InterActive's $23.1 billion -- some analysts speculated about a joint Malone-Diller bid for Disney.

"John Malone and Liberty are always in the A group of usual suspects when you talk about media consolidation," said James Penhune, an analyst with Strategy Analytics in Newton. "Liberty would be the one that could probably afford to do it."

While speculation swirled about whether anyone would contest Comcast's Disney bid, attention also turned yesterday to whether a Disney-fattened Comcast would trigger acquisitions or mergers of third-tier cable players like bankrupt Adelphia Communications Corp., Cablevision Systems Corp., financially stressed Charter Communications Inc., or Cox Communications Inc. Likewise, Dish Network satellite TV operator Echostar Communications Corp., with 9 million subscribers, could become a takeover target, now that News Corp. has taken a controlling interest in US leader DirecTV.

"Inherently, such a substantial merger will have a trickle-down effect across both the cable and entertainment industries," says Richard Greenfield, media analyst with Fulcrum Global Partners, a New York brokerage.

Comcast dominates the industry with 21.5 million subscribers, close to double Time Warner's 11 million. Charter, Cox, and Adelphia are all between 5 and 7 million, with Long Island-based Cablevision at 3 million. To keep up with Comcast's buying clout with programmers, "horizontally merging distribution assets is likely to become a strategic priority," Greenfield wrote in a research report released yesterday.

Gartner Inc. analyst Patti Reali agreed that a Comcast takeover of Disney "potentially can change the equation for what happens in the rest of the cable industry," and could lead Time Warner to reconsider current plans to spin off its cable TV unit.

In a speech at an Orlando Disney investor conference, former US Senate Majority Leader George Mitchell, now a Disney board member, said that "we are determined to conduct the most thorough, searching and fair analysis consistent with the interests of our shareholders, and to respond in an appropriate manner."

Meanwhile, many investors said despite a reputation for being a patient, disciplined dealmaker willing to bow out of bidding wars, Comcast chief executive Brian L. Roberts may come back with a richer bid for Disney. "I'm not sure Comcast has the firepower to go significantly higher," said Harold Vogel, author of a book on entertainment industry economics and chief executive of Vogel Capital Inc. in New York. "Having said that, we know takeover battles are always played out so the first offer is not the last."

Peter J. Howe can be reached at howe@globe.com. Material from Globe wire services was used in this report.