Disney Dollars--Ripe for Speculation?

Michael Eisner may have something more valuable than all of the Disney Dollars in the world, or even his unexercised stock options.

With Disney’s shares now hitting all-time highs daily--they rose another 87.5 cents to close at $51.125 Monday--entertainment executives speculate that Eisner may soon have a valuable “currency� in Disney stock that could effectively be used in a major stock-swap acquisition.

There has long been speculation that Disney might be a potential buyer of a television network in order to gain one of the scarce distribution outlets for its shows, or even a major music company if one ever became available.

A strong stock price would put Eisner in the position of using shares, or a combination of cash and stock, to make a huge deal.

There are plenty of caveats. First, Disney historically hasn’t done many acquisitions, let alone ones using its stock.

Second, the company isn’t likely to freely part with shares. Last week, Eisner emphasized to analysts that the company wouldn’t do an acquisition that would be very dilutive to Disney stock, and also sent a clear message that Disney has no plans to overpay for anything.

“These guys really value the equity,� said Seidler Cos. analyst Jeffrey Logsdon.

The consensus is that Disney’s stock, which not long ago languished in the high 30s, still has a way to go--maybe to $65 a share or more--before it would make sense to use shares instead of borrowing to finance a big acquisition. Wall Street currently figures Disney can borrow from $5 billion to $10 billion for a deal if it wants.

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Hits and misses: Hits magazine misfired last week. Sources said editors of the gossipy music industry trade magazine recalled some 900 copies Thursday night two hours after they were delivered to West Coast record company offices.

An additional 7,600 copies typically mailed to New York on Thursday night also never left the shipping dock.

Hits wouldn’t comment, but sources familiar with the incident said that Hits officials discovered that a gossipy line about an entertainment executive’s marital break-up inadvertently made it into print due to an editing error. So they scrapped the entire issue. The magazine was reprinted on Friday without the line, with 8,500 issues sent out Saturday morning.

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Guber update: At the opposite end of the headline-making spectrum from the Steven Spielberg, Jeffrey Katzenberg and David Geffen venture, DreamWorks SKG, is Peter Guber’s new entertainment company, which is operating with about as low a profile as there is in Hollywood.

So far, hiring is going slowly at the venture. To date, the only appointment has been the hiring of former Radio City Music Hall executive Scott Sanders.

Sources say one good bet to join Guber soon is Sony Executive Vice President Paul Schaeffer, who has been serving as Sony’s point man on the Guber venture. Prior to joining Sony, he was a lawyer representing Guber and his former partner, Jon Peters.

Sources said that a likely scenario would have Schaeffer serving as something of a chief operating officer, overseeing the day-to-day operations of the company, such as business and legal affairs.

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Jaffe update: Stanley Jaffe, the former Paramount Communications Inc. president, lost a round in his lawsuit against Viacom Inc. when the state supreme court in New York dismissed his suit.

Jaffe, who is expected to appeal, filed suit in April, alleging he was deprived of $20 million in stock options and other benefits after he was forced out last February amid Viacom’s acquisition of Paramount.

Jaffe, a veteran movie producer, is said to be in final negotiations with Sony Pictures Entertainment on a production deal in which he is expected to bring to the table a large chunk of his own financing.

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On board: Creative Artists Agency Chairman Michael Ovitz for the first time joined a corporate board of directors on Monday when he agreed to take a seat at computer magazine publisher Ziff-Davis.

Ovitz is known to be close to Wall Street financier Ted Forstmann, whose Forstmann Little & Co. bought Ziff-Davis for $1.4 billion.

Other outsiders include media investment banker Steven Rattner, cable executive Brian Roberts and former Secretary of State George P. Shultz.

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Chuck Philips contributed to this column.

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Mickey’s Comeback

Walt Disney Co. stock has rebounded from a low in October as investors view the company’s growth prospects more positively. Weekly closes except latest:

Monday: $51.125

Source: TradeLine

Researched by JENNIFER OLDHAM / Los Angeles Times