Just before Thanksgiving, Disney (DIS) and Citadel Broadcasting (CDL) announced a restructuring of CDL’s deal to buy DIS’ radio assets. The total value of the deal has been reduced by $100 million and an additional $200 million of cash due to DIS will now come in the form of CDL shares. Essentially, DIS is trading $300 million in cash for $200 million in CDL shares. It was widely expected the deal was going to be renegotiated since the radio industry has suffered severely since the deal was struck, so this news isn’t much of a surprise. The loss of $100 million in value is minor compared to DIS’ market cap of $68 billion. DIS now will temporarily own 57% of CDL instead of 52% but the plan all along has been to pass that ownership on to DIS shareholders. It is still not certain what form the distribution will take. I think this is an acceptable outcome for DIS shareholders and it now looks closing is a near certainty by 2Q07.
In other news, the weekend box office, performed admirably against another tough comparison…..

My thesis that depth of quality product reaching all movie going demographics could limit the year-over-year declines against last year’s trio of blockbusters (Harry Potter, King Kong, Narnia) provide correct this weekend. The overall weekend for the top 12 films was flat as the new Bond and Happy Feet were able to match last year’s second weekend for the fourth movie in the Potter series. Bond and Happy Feet are showing very good legs and this coming weekend should be another where depth limits the damage. Comparisons then toughen again. I still think investors will look past the tough compass this holiday period leaving renewed positive sentiment toward the box office intact ahead of next May’s blockbusters (Spiderman 3, Shrek 3, and Pirates 3). This is good news for major entertainment conglomerates and theatre exhibitors including DIS, News Corp (NWS), Time Warner (TWX), Lionsgate (LGF), Regal Entertainment (RGC), and Carmike Cinemas (CKEC).