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BUSINESS WATCH : Darn Near Breathless

The Walt Disney Co. acquisition of Capital Cities/ABC Inc. for $19 billion in cash and stock represents the biggest media company merger ever and the fourth biggest overall merger. In effect, if it is approved by federal regulators and shareholders it will create the first Los Angeles-based television network. When something of this magnitude occurs, it seems that even the experts get a little breathless.

“This creates a company with global reach that can meet the ongoing demands for American entertainment in the multichannel environment around the world,” said Christopher Dixon, a Paine-Webber Inc. analyst.

“The professionals immediately understood the synergy of the deal. This is about globalism,” said money manager Mario Gabelli.

We note that earlier predictions of mega-synergy and globalism haven’t always come to pass. The marriage of Time Inc. and Warner Communications (Time-Warner) has been a consistently edgy one. And the MCA-Matsushita Electric Industrial mating, in which movie moguls chafed under their new bosses, was hardly a heavenly match.

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In this case the much vaunted synergy seems more likely to work; the two companies appear to be in sync and each offers something the other obviously needs, with Disney having huge entertainment “content” and Cap Cities having the means of distribution in its network. What does all this mean to consumers? Away from the talk of industry analysts, that’s the key question that will have to be asked and answered again and again.


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