A news story on 5 January 2011 may look something like this: Morgan Stanley topped 2010 global debt-and-equity league tables and broke banking records by representing Walt Disney Co. in its $120 billion acquisition of Greece.
Explaining why Morgan Stanley discounted its fee to win the assignment, chief executive James Gorman said underwriting the deal that brought Greece’s 179 years of independence to an end showed the world his own firm had recovered from the financial crisis. As one of the terms, Greek Prime Minister George Papandreou took a new role greeting visitors at the new EuroGreece Park at the Acropolis.
Goldman Sachs’ private equity group took a 15% stake in Greece alongside Disney. One wing of the European Monetary Union, led by German Chancellor Angela Merkel, argued that Disney and Goldman underpaid compared with Greece’s $333 billion gross domestic product. Others say the former sovereign is worthless, because its obligations are growing faster than its citizens’ ability to ever repay them.
In its fairness opinion, UBS said synergies between Greece’s untapped intangible assets and the execution skills of the world’s largest media and entertainment company could close Greece’s 13.6% budget gap.
Disney’s decision to buy Greece has been credited to Steve Jobs, CEO of Apple Inc., and Disney’s largest shareholder. In 2009, Jobs told Disney to dream bigger, setting into motion a deal that is generating a new series of Disney hit movies and product spin-offs, and transforming the theme park industry.
Already under construction are Space Mountain Olympus, the Pirates of the Aegean water theme park, the Little Mermaid Harpoon thrill ride, and Trojan, a multimedia adventure that the company reassured shareholders yesterday will not be adult-themed.
Experiences such as these are expected to substantially increase the number of tourists beyond the 16 million who now visit Greece each year and plug a $45 billion annual revenue hole .
Disney also is proceeding with its more controversial plans. Our own brand, like Greece’s, is so powerful because of our heritage, says Iger. They have Aristotle, we have Mickey Mouse.
In the past, Disney rarely attempted entertainment based on Greece’s mythology and early history, the exception being the film Hercules. The incest- and rape-filled origins of the Greek pantheon of gods and the prevalence of homosexuality in early Hellenic culture had been deterrents for the family-oriented firm. According to the Morgan Stanley filing, Greece offered Disney the chance to extend its brand by creating the Disney Odyssey division.
Not all agree with the move. This is classic mission drift, activist investor William Ackman, head of Pershing Square Capital Management, said in a press release.
According to Disney spokeswoman Zenia Mucha, the company had already tested the waters successfully for a racier version of Disney with its ABC Family television network. Disney sees potential for cross- sponsorship arrangements from advertisers such as Nike Inc. and Apollo Investment Corp.
The deal, which some say has the potential to outdo the East India Co.’s exploitation of India, also brought Disney iconic antiquities. Management of these by the Odyssey division will enable it to display them without altering explicit elements. Disney is nonetheless anticipating protests from religious groups and possibly museums.
The market was filled yesterday with speculation about similar deals, including reports that Diageo Plc is in discussions with Ireland, Spain and Portugal, three countries known for their alcohol production and consumption.
Calls to a Diageo spokesman weren’t returned.
Alice Schroeder, author of The Snowball: Warren Buffett and the Business of Life and a former managing director at Morgan Stanley, is a Bloomberg News columnist. Comments are welcome at email@example.com