If I can't have all of U, I'll settle for part of E!
Maybe those weren't the exact words used in sealing the deal between Comcast (Nasdaq: CMCSA ) and Motley Fool Stock Advisor pick Disney (NYSE: DIS ) , in which Comcast acquired the family entertainment giant's 39.5% stake in E! Networks. But they may have been close.
Back in February 2004, Comcast offered an unsolicited buyout bid that valued Disney at $66 billion. The House of Mouse felt vulnerable at the time, with then-CEO Michael Eisner's popularity waning and the media company in disarray.
After the jilting
Disney ultimately passed on the marriage proposal. Even though Disney theme parks are loaded with turnstiles, it wasn't about to go for an exit strategy. Disney was an acquirer, not an acquiree. It had most of the L's working for it -- legacy, library, and longevity. Sure, the tank may have been running empty on a few others, like leadership and legs, but it was really only a matter of time before ABC regained its groove and saved its original animation business by acquiring Pixar.
Did Disney do the right thing in walking away? Disney's stock has risen 41% since just before Comcast made the offer, which would have provided a beefy convergence of cable and content. In that time, Comcast shares have risen by only 20%.
Hostile bids and unrequited advances are usually the seeds for a stormy relationship, but Disney and Comcast were destined to cut some kind of deal eventually. One of the reasons why Disney and Comcast seemed like such a perfect match was that Comcast's president of cable operations, Steve Burke, was also once a key Disney executive with a hand in running ABC, launching the Disney Store concept, and saving Disneyland Paris.
The E! deal makes sense. As fellow Fool David Lee Smith pointed out earlier today, Disney gets $1.23 billion for the stake, and now Comcast will own the entertainment network in its entirety. It was an odd fit at Disney anyway. Even though the fundamentalist boycott groups have mostly moved on, they probably didn't appreciate some of the original E! programming, such as the decadent Wild On party hotspot series and the Playboy (NYSE: PLA ) -enshrining Girls Next Door reality show.
Let's make a deal
Handing over the keys to E! wasn't the only deal struck between the two companies. A pact with greater implications finds the two companies extending -- and enhancing -- the distribution of Disney's various networks for Comcast cable and digital cable subscribers.
Select Disney films and television programming will also be available through Comcast's video-on-demand outlet (get the details in David's article here). This marks the first time Disney has taken that approach with its core ABC prime-time programming through a cable provider. In the 10 markets where ABC owns its local affiliate, the ABC video-on-demand streams will be free. This is a big selling point for Comcast as it tries to hook viewers on the pay products by also loading up its library with free titles to lure them in.
Yes, Comcast and Disney are a happy couple again -- even if this open relationship allows them to see other people.
Putting a little sole into things
As if inking contracts with Comcast wasn't enough, Disney also struck a licensing deal with Payless ShoeSource (NYSE: PSS ) . Payless had contracted with suppliers to sell bargain-priced footwear featuring Disney characters in the past, but this deal finds both parties working together to create the branded merchandise and cutting out the middleman.
Payless will tap Disney's wide library of characters, including the Disney princesses, Power Rangers, Winnie the Pooh, and some of the more popular stars from the Pixar camp.
The move comes even as Disney has been scaling back on the number of licenses it doles out in order to have more merchandising control. Then again, this is probably the kind of deal that the company will seek out in the future. It's cost-effective, grey-matter-percolating, and possibly even educational, should Disney make bigger inroads into branded footwear.
The accidental stock pick
Disney didn't start out as a Motley Fool Stock Advisor recommendation. The company is on the newsletter's scorecard because David Gardner originally singled out Pixar to his subscribers. Once Pixar was acquired by Disney, David weighed the merits of the combined company and decided to stick with the pick.
Because David loves investing in dynamic, early-stage companies, this is a scenario that plays itself out fairly often. He also recommended PayPal to Stock Advisor readers, and it was acquired for a premium by current pick eBay (Nasdaq: EBAY ) .
That's the beauty of buying into disruptive companies. If they alter the landscape, larger players will welcome the chance to snap them up at a premium. And when it's a great company like Disney or eBay doing the snapping, it's just one more valuable recommendation to add to an already winning newsletter.
Longtime Fool contributor Rick Munarriz enjoys taking his family to amusement parks of all sizes, all over the country -- including Disney World later this week. He owns shares in Disney. He is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.The Fool has a disclosure policy.