Disney Window-Shops in Europe

Walt Disney Co. said Wednesday it is casting its net outside the United States for possible acquisitions but music companies will not be on its wish list because they are still too expensive.

Disney, whose only major acquisition in the last 15 years has been the ABC television network, said Internet-related businesses could be among its targets, but any possible new addition to the California-based group would have to represent good value.

“We’re not on an acquisition spree, but we do have significant ability to acquire and are looking at areas related to our expertise outside the United States,” Disney Chairman Michael Eisner told investors at a company presentation in London.

Disney is one of the world’s top five entertainment giants, with its fingers in film, television, the Internet, theme parks and merchandising.

Eisner pointed to the company’s solid cash flow and decent debt ratio to fund potential acquisitions.

Already home to Hollywood Records, Disney has long been rumored as a potential suitor for British music company EMI to complete its entertainment spectrum, but Eisner said the company is too expensive by billions of dollars.

“The point is to make money out of your acquisitions, not just to own it. EMI has a great library, but its ongoing business does not justify these sorts of prices,” Eisner said.

“If record companies fell to prices that reflected their true value, we might be interested, but at these prices we’re not.”

EMI, which is valued at more than $6.3 billion by market capitalization, is currently in talks with German media group Bertelsmann about a possible merger.

Eisner, who has led Disney since the early 1980s, also ruled out an investment in Rupert Murdoch’s soon-to-be-floated satellite TV platform Sky Global Networks and said the group had not been approached by the Australian-born media baron.

“It wouldn’t make economic sense,” Eisner said. “We are generally value buyers. I still feel the preferred approach to acquisitions is to take out a company in dire need or one that you understand very well and fits with your company.”

Content, not distribution, will play the lead role in any overseas acquisitions, despite Disney’s vigorous criticism of the creeping powers of distributors.

“Content is king but, if people start to dethrone the king, you need to be in distribution,” Eisner said.

“While we acquired ABC, our strength will nevertheless remain toward content and we will fight to make sure no one cuts the toll booth,” he said.

Time Warner cable imposed a blackout on Disney’s ABC network this year when they failed to reach a carriage deal.

On the hot topic of its advertising, Eisner reiterated that he expects ad spending to pick up next year, but only after warning that a soft ad market would cut into profits in Disney’s current quarter.

“The softness we’re experiencing in advertising now is temporary,” Eisner said. “We expect things to turn around as we go into 2001.”

Disney shares were hammered in early November on concerns over a softening ad market and lower ratings for its hit television show, “Who Wants to Be a Millionaire.”

Disney shares rose $1 to finish at $31.88 on Wednesday on the New York Stock Exchange, well short of the 52-week high of $43.88.