---
title: "Walt Disney → Capital Cities/ABC"
url: "https://mahouse.world/ma-deals/walt-disney-buy-capital-cities-abc-1995"
type: "M&A deal"
year: "1995"
---

# Walt Disney → Capital Cities/ABC

Disney's $19bn purchase of Capital Cities/ABC, agreed in July 1995 and then the second-largest merger in US corporate history, gave a film and theme-park company the ABC network and 80% of ESPN — and brought in Bob Iger, who later ran Disney for nearly two decades.

Gave Disney a broadcast network and ESPN, and set the template for content-plus-distribution deals.

- **Acquirer:** Walt Disney (United States)
- **Target:** Capital Cities/ABC (United States)
- **Value:** $19B
- **Announced:** July 1995
- **Completed:** February 1996
- **Sector:** Media
- **Deal type:** acquisition

## Why it mattered

Under Michael Eisner, Disney wanted a US broadcast network to guarantee an outlet for its programmes; a plan to buy NBC had failed because General Electric wanted to keep a majority. Capital Cities/ABC, formed in 1985 when Capital Cities bought the much larger ABC for $3.5bn with Warren Buffett's financial backing, owned the ABC network, eight television and 21 radio stations, 80% of ESPN and stakes in Lifetime and A&E. Earlier merger talks had stalled partly because Disney wanted to pay cash and Capital Cities wanted stock.

Buffett, whose Berkshire Hathaway held 20m Capital Cities shares, described how that changed. On 14 July 1995, at Allen & Company's gathering in Sun Valley, he met Eisner in the street on his way to play golf with Tom Murphy, Capital Cities' chief executive; both men signalled they might bend on cash versus stock, and within a few weeks a contract was drafted in three days. Announced on 31 July, the deal offered one Disney share plus $65 in cash for each Capital Cities share, with holders able to ask for all cash or all stock subject to allocation. Capital Cities' shares rose $20.625 to $116.75 that day. It completed on 9 February 1996: shareholders received $10.1bn in cash and 155m Disney shares valued at $8.8bn, and Disney booked $19.0bn of intangible assets to be amortised over forty years.

## What it left behind

As a result of the deal Disney sold its Los Angeles station KCAL for $387m, and in 1997 it disposed of most of the publishing businesses that came with ABC. The lasting assets were ESPN and management. Iger, president of Capital Cities/ABC at the merger, became Disney's president in 2000 and chief executive in 2005, buying Pixar and Marvel, and served until March 2026 apart from a break between 2020 and 2022. ESPN remained the company's sports arm: in August 2025 it launched a direct-to-consumer streaming service, and in January 2026 it completed a deal giving the NFL 10% of ESPN in exchange for NFL Network, leaving Disney with 72%. The chance meeting is the famous part, but the structure closed the deal: a mix of cash and shares, with elections either way, bridged a buyer that wanted to pay cash and a seller that wanted stock.

Source: https://www.upi.com/Archives/1995/07/31/Disney-Capital-Cities-to-merge/5062607821003/