Disney & abc // Will Clash of Cultures Mar Fairy-tale Merger?

NEW YORK What if Roseanne punches Mickey Mouse in the nose?

When two enormous companies such as Walt Disney Co. and CapitalCities; ABC Inc. agree to merge, as they did last Monday, issues ofcorporate culture and "fit" abound. How will the companies fittogether?

Roseanne, the star of ABC's hit television program, and Disney'sMickey are just one example of the odd combinations generated by the$19 billion cash-and-stock acquisition.

Will Peter Jennings soon find himself interviewing Pocahontas,the subject of Disney's latest animation blockbuster, on ABC's "WorldNews Tonight"? How about "ABC's Monday Night Ice Hockey" - featuringDisney's Mighty Ducks hockey team?

The second-largest merger of all time would create the largestmedia and entertainment company in the world, with combined revenueof about $16.5 billion. Officials at both companies agree that itssuccess hinges on the ability of the two companies to work together.

Some analysts wonder, though, if ABC may stretch Disney'swholesome image.

"Disney is identified by more family-oriented entertainment thanABC," said Harold Vogel, analyst at Cowen & Co.

"If I'm Disney," said analyst Dennis McAlpine, with JosephthalLyon & Ross, "I want to stay away from ABC's programming."

Disney is best known for bringing Mickey and friends into theworld and for its wholesome theme parks, Disneyland and Disney Worldin the United States and parks in Japan and Europe.

By contrast, ABC has outpaced its television rivals, NBC andCBS, in prime-time ratings this year, in part because of itswillingness to appeal to the viewing public's prurient interests.

Many of ABC's most popular programs stretch the boundaries ofpermissible popular culture. "Roseanne" generated considerablecontroversy not long ago for a scene in which Roseanne, aworking-class mom, kisses a lesbian. Meanwhile, "NYPD Blue," apopular police drama, features occasional nudity and profanity.

Speaking with reporters last Monday, Disney Chairman and ChiefExecutive Michael Eisner said, "ABC will be different in itscreativity," but provided no details.

The programming considerations go beyond prime time. There ispotential for conflicts and pressures in sports programming, as well.ABC controls ESPN, the national all-sports network, and Disney ownsthe Mighty Ducks of the Turn to Page 34 Merger Page 31 National Hockey League. Disney also is buying part of theCalifornia Angels baseball team. Would ESPN feel pressure tobroadcast a Disney team even if it didn't appeal to the broadestrange of viewers?

"There shouldn't be pressure (on ABC), but there probably willbe," McAlpine said.

But Eisner said Disney won't dominate ABC's prime-time schedule."The ABC of today is not the ABC of 10 years ago."

The transaction has additional benefits that weren't mentionedin news conferences. The agreement clarifies Disney's murkysuccession picture.

Wall Street has been uneasy about Disney's executive ranks sinceits No. 2 official, Frank Wells, died in a helicopter crash last yearand Eisner underwent a heart-bypass operation. Robert Iger,president of Capital Cities, is now the favorite to succeed Eisner,analysts said.

"It's good news that Iger is next in line," Vogel said. "He issmart and very respected in the entertainment industry, and he knowsHollywood well."

Problems of conflict and culture are not the only hurdles toclear. Deals of this magnitude have special pressures.

Hopes ran high in the telecommunications industry in 1993 whenBell Atlantic Corp. and Tele-Communications Inc. teamed to announce a$21.4 billion combination. The transaction quickly crumbled, inlarge part, under the weight of chief executives' egos, analystssaid.

The top priority of Eisner and Thomas Murphy, Capital Citieschairman and CEO, is "creating an environment now where their topcreative and business people will want to stay," McAlpine said.

"Time is the biggest enemy of Eisner and Murphy," McAlpine said. "Six months will pass before this deal is done. A lot can happen."