NEW YORK (CNN/Money) -
Comcast Corp.'s efforts to buy Walt Disney Co. cooled Tuesday, as a person close to the company said the nation's largest cable operator is not interested in buying the media and entertainment conglomerate at the current price.
But industry analysts and investors said Comcast may just be waiting to see if the deal makes more financial sense later. Most analysts expect at least one higher bid to emerge from Comcast, despite the denial. Some also believe another bidder for Disney may yet emerge.
Disney's stock has jumped about 12 percent since Comcast's stock offer to buy Disney was revealed last Wednesday. At the time, the deal was valued at about $66 billion, including the assumption of $12 billion in debt.
Disney's board rejected the offer Monday, noting the all-stock offer is now below its market price. The Disney board's statement said it was open to a higher bid.
The person close to Comcast told CNN/Money Tuesday that Comcast is not looking to raise its bid or to lead a proxy fight to remove Disney CEO Michael Eisner at the Disney shareholder meeting March 3.
"This has never been about Eisner," said the source, who spoke on the condition that they not be identified. "If we're not interested in Disney at these prices, we're not going to run a consent solicitation."
But the source also said that the Comcast's offer is not being withdrawn, nor is it dropping its interest in a merger with Disney at some point in the future.
"We're not saying it's dead at all. We continue to believe the merger proposal represents a sound and compelling proposition for both sets of shareholders," this person said.
Shares of Disney (DIS: up $0.03 to $26.95, Research, Estimates) edged lower Tuesday after the board rejected Comcast's offer, while shares of Comcast (CMCSA: up $0.92 to $30.82, Research, Estimates) regained some of the ground lost since the bid became public.
Fight at Disney not over
While Comcast apparently won't lead a proxy fight against members of the Disney board, Eisner's most vocal critics -- former board members Roy Disney and Stanley Gold -- sent a letter to shareholders Tuesday saying the Comcast offer for Disney is another reason change is needed.
They are urging shareholders to withhold support for Eisner as well as his board allies, John Bryson, Judith Estrin and George Mitchell.
"We believe the many strategic failures of Mr. Eisner, senior management and the board have made Disney an attractive target for those who recognize, as we do, that with the right leadership the extremely valuable assets of Disney can be properly utilized to create lasting and significant value," the two former board members said in their letter.
A spokesman for Gold and Roy Disney noted the two have not taken a position regarding Comcast's offer.
Some analysts and investors also said it may be too soon to say a Disney-Comcast deal won't get done.
Many interviewed Tuesday even said they expect Comcast will eventually relent and raise its bid for Disney, though probably not much above Disney's current price. A bid at or slightly over $30 a share is widely expected.
"That could be posturing," said Craig Moffett, who follows Comcast for independent research firm Bernstein, referring to the comments from the source close to Comcast.
"They'd be crazy to start a bidding war when they're the only bidder," he added. "That shouldn't be taken as a withdrawal from the process, but it's a clear signal they can afford to wait. This could play out over months or a year or more."
The bid for Disney was revealed the same day that the company reported better than expected earnings per share of 33 cents for the quarter that ended Dec. 31. That compares to EPS forecasts of 23 cents and year-earlier EPS of 17 cents. The stock has seen about an 81 percent rise since its 52-week low in March of last year.
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Paul Kim of independent investment research firm Traditional Asiel Securities, said that he thinks the stock is unduly inflated right now and could sink back to the $18 range if the some recent successes are not repeated. He has a sell recommendation on Disney right now.
"If I were advising Comcast, I'd tell them to do the same thing, drop the bid and wait for the price to drop," he said.
But some other analysts have recently raised earnings forecasts and outlook for the Disney stock, even excluding the impact of the Comcast bid. Some believe the stock shouldn't see a large decline even if the bidding disappears.
"This bidding is just highlighting the value of assets," said David Joyce, who follows both Disney and Comcast for Guzman & Co. "I increased my target for Disney to $27 in January. If it falls, it'll fall only modestly."
Most analysts say that Comcast is unlikely to go much above $30 a share for Disney even if it does increase the offer, which may not be enough to convince the Disney board. Several put the chance of a Comcast deal in the near future at less than 50-50.
But some investors still hope to see another bidder enter the fray, though at this point none have surfaced.
"I think it's a globally recognized valuable brand, at a time when its board is in turmoil," said Thomas Runkel, president of the Runkel Value Fund, which has about 6 percent of its portfolio in Disney and 5 percent in Comcast. "Disney's board will consider any reasonable bid."
Runkel, who said he intends to vote his shares against Eisner, also said neither Disney's rejection of Comcast's offer nor the source's comments about Comcast's interest made him think the bidding for Disney was at an end.
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"Disney board did the right thing by rejecting the offer -- it's below the intrinsic value of Disney," he said. "But everything they did in wording seemed to be based on price."