Bottom-Up Comcast Wants To Go Top Down

[turlough]

NEW YORK- Forbes- Two years ago when Comcast won its $51 billion bid for AT&T Cable, the consensus was that the deal made sense because Comcast, a proven talent in the cable business, was buying cable assets from AT&T, which had recently proven its talent mainly for squandering shareholder money in ruinous mergers.

Comcast's (nasdaq: CMCSA - news - people ) proposed deal with The Walt Disney Co. (nyse: DIS - news - people ) has almost the opposite logic. It would propel Comcast from a business it knows well, cable, into businesses it has relatively little experience: media networks, theme parks, movie and television production and merchandising to children. On the other hand, Comcast owns E! Entertainment Television and a golf channel, and it buys what Disney's studio and TV businesses supply. The proposed deal looks less like Comcast's buying of AT&T Cable than AT&T's merger streak, which ultimately gave Comcast its opportunity.

The two deals, of course, have one thing in common: Comcast's prey is, as before, a wounded beast. Disney Chairman Michael Eisner has faced staunch criticism from Roy Disney, a former board member and the nephew of Walt Disney, the company founder, among others. Once the golden boy of golden boys, Eisner is seen as a graying corporate infighter. Comcast's Brian Roberts' star, on the other hand, is on the rise, and the deal is given a fair chance of success even though Comcast is offering nothing but shares and no cash.

For Roy Disney, this may be a case of being careful what you wish for. Eisner, whatever his faults, is a showman with deep roots in the entertainment business. Comcast's Roberts and his team, by contrast, have been praised as unlikely to be distracted by Hollywood glitz. But for Roy Disney, the problem was that Eisner was not distracted enough, that he had lost touch with Disney's magic and its storytelling roots.

Just as AT&T (nyse: T - news - people ) was unproven in the cable business, Comcast is unproven in all of Disney's businesses from sports teams to thrill rides. Disney has all kinds of problems. Its ABC television network is faltering; it just lost its partnership with Pixar Animation Studios (nasdaq: PIXR - news - people ); its own efforts at animated features have faltered; its board is seen as still controlled by the Machiavellian Eisner; its stock price is too low.

But the Comcast corporate governance is hardly a model of openness, says Rakesh Khurana, a professor at Harvard Business School, and it has much in common with other family companies gone public. Khurana points out that, as a cable provider, Comcast is one of the largest purveyors of "adult content" in America, which is hardly consistent with the Disney "culture."

Comcast has put forward its president, Stephen Burke, as a key element in the deal. Burke, 45, was a Disney executive for 12 years before he joined Comcast in 1998 and was one of many people once considered a possible successor to Eisner. Burke's father was a top executive at Capital Cities Communications, which bought the ABC television network in what is recalled as its better days, before it was merged with Disney.

In presentations Wednesday, Burke criticized the performance of a number of Disney divisions--who hasn't?--and predicted that Comcast would be able to increase the company's cash flow by $800 million, to $1.3 billion, within three years. How inspiring.

No one knows what Comcast might do with Disney if it gains control of the company. But so far, no one seems worried, as Roberts, 44, has handled mergers before and has shown proficiency outside his core competency on some occasions. Thomas Eisenmann, another Harvard professor who studies cable companies, says Comcast has worked with and around entertainment producers and should be "very familiar with the management challenges."

But in the past, Roberts, son of Comcast founder Ralph Roberts, has been praised for learning the family business from the ground up. He installed cable wire, worked in the field and sat at his the right hand of his father, who was one of the founders of the industry itself, and who is no stranger to mergers.

Now the younger Roberts will--if he gets Disney--have a chance to learn new businesses from the top down.