The Disney Rumor That Won’t Die
About once a year, Disney analysts experience a phenomenon akin to Groundhog Day.
The same story picks up steam, even though nothing has changed since the last time anyone spoke about it.
Yes, there’s one Disney rumor that just won’t die. So, we might as well talk about it.
Could Apple purchase The Walt Disney Company? Let’s evaluate the pros and cons while discussing why the rumor has popped up again.
About the Rumor
MickeyBlog has written about this topic for at least three years. I suspect it’s even longer, but Disney’s poisoned apples mess with the search results.
The rumors arguably started soon after Bob Iger took over as CEO in 2005. The reality is that they’d existed even before then.
Wall Street executives have always recognized the potential of a technological/media powerhouse like Apple/Disney.
In early 2006, Iger spent $7.4 billion for Disney to purchase Pixar from Apple and Steve Jobs.
You may recall that Jobs had worked with Pixar from the early days, making it one of his babies. As such, he wouldn’t sell the animation studio to just anyone.
Iger persuaded Jobs that Disney made the most sense as Pixar’s owner. Jobs not only agreed but forged a close personal relationship with Iger.
Due to the friendship between the executives, some awaited the day when Jobs would make the proverbial godfather offer for Disney.
Alas, that moment never arrived, with Jobs dying in 2011. Iger was among the few to know about Jobs’ failing health.
When Tim Cooks succeeded Jobs at Apple, this rumor could have, maybe should have died. It didn’t because the world had changed.
The emergency of streaming video turned Apple into a business with a background in hardware but a future in digital content.
In 2019, Apple dipped its toe into the waters as a streaming service. That shaky first year caused many to wonder whether Apple had done the right thing.
Then, Ted Lasso debuted in August 2020, and everyone stopped debating it.
For better or worse, Apple is in the content business now and will remain that way.
Who is the best storytelling company in the world? Of course, it’s Disney!
So, some keep asking whether/when Apple will buy Disney.
The Latest Version of the Rumor
Marketwatch recently posted some analysis (that may be paywalled) involving Apple’s renewed interest in Disney.
Like many such evaluations, it’s one person’s opinion and little more than a guess, yet people are reporting it as fact anyway.
An analyst at Needham & Company argued the following:
“We believe that great content and a strong distribution footprint are complementary networks. That is, both are worth more if they have the other.”
According to this logic, Apple’s value would increase by 15-25 percent if it owned Disney, too.
This seems like a good time to mention that Apple possesses a market cap of $2.6 trillion, give or take, depending on the day.
Using these estimates, Apple’s valuation would rise to a minimum of $3 trillion, which is growth of $400 billion. It could be as much as $3.25 trillion or $650 billion more than now.
The Walt Disney Company currently claims a market cap of $185 billion or so. Even if we assume that Apple overpaid by 50 percent, it’d still profit here.
Buying Disney at $270 billion would still guarantee profit of $130-380 billion!
Apple could profit by an amount equivalent to the current valuation of Procter & Gamble or Mastercard! It’d be like adding a Fortune 15 company to the most valuable corporation in the world.
We’re talking about some comically big numbers, which means a lot of this comes down to guesswork and supposition.
Still, that sort of financial opportunity grabs attention, right? You don’t need to know much about business to understand such a deal makes Apple that much more massive.
I think of the matter like Bane from Batman. He’s huge already, but then he takes HGH and turns into a Godzilla-sized person. That’s Apple if it buys Disney.
Pros and Cons of This Rumor
The biggest pro you can have in any Wall Street discussion is “making a lot more money.” It doesn’t matter whether a corporation gets better or worse in most instances.
Thankfully, Disney AND Apple fans think differently. We’re talking about two of the most passionate and brand-loyal fan bases on the planet.
Each one’s pride in the product would assist in any acquisition/merger. Also, the pieces fit eerily well.
As the analyst points out, two billion Apple products are out in the wild. More than 1.2 billion of the wealthiest consumers on the planet own them.
These customers desire content they can watch on their smart devices. And nobody does content better than Disney.
In fact, Disney’s recent financial struggles partially stem from the fact that the company tried to create too much content.
Disney literally wants to tell more stories than it can afford. Meanwhile, Apple currently holds more than $50 billion in cash on hand.
When we include liquid assets, the number soars to $200 billion. That’s right, folks. Apple could basically swallow Disney using cash on hand!
Tim Cook wouldn’t need to perform any leveraging to snag Disney, as the latter company did with the Fox assets. Apple can buy Disney relatively cleanly.
So, why wouldn’t they? Therein lies the rub. I never buy this rumor because it goes against the very strategy that has made Apple the biggest and the best.
Apple simply doesn’t spend tons of money on mergers and acquisitions. Apple’s largest purchase ever was for Beats, the headphone manufacturer.
Apple spent $3 billion to acquire Beats. So, $200+ billion for a Disney purchase would be wildly out of character.
From Disney’s perspective, someone without an interest in theme parks would own the company. That’s not great, either.
Could Apple Buy Disney?
Look, this rumor is at least 15 and arguably as much as 30 years old. It hasn’t gone away for a reason. The pieces really do fit, at least in broad strokes.
Similarly, the deal has never happened because the two companies don’t mesh perfectly. Sure, Apple needs content, but it could get that MUCH cheaper.
Several companies like Lionsgate, Sony Pictures, and Paramount are available for the right price…and that price is lower than a couple of years ago.
Content companies lost a fortune due to an industry-wide 2022 retrenchment. It’s a buyer’s market, and Apple has all that cash it could splash around if so inclined.
In fact, Amazon and Apple seem like potential buyers for movie theater exhibitors.
The two largest chains, AMC Theatres and Regal/Cineworld, are both bankrupt/close to it.
Apple’s purchasing power could make more sense by buying multiple smaller companies than one large one. As for Disney, the idea seems like a no-go right now.
Even if Iger did express interest in such a merger, he almost assuredly wouldn’t sell Disney during its 100th anniversary.
That pushes the timeline for this rumor to October 2024 at the earliest, and I’m skeptical about then, too.
In short, this headline makes sense on paper and definitely passes the laugh test. That doesn’t make it anything more than consistent clickbait, though.
Thanks for visiting MickeyBlog.com! Want to go to Disney? For a FREE quote on your next Disney vacation, please fill out the form below and one of the agents from MickeyTravels, a Diamond Level Authorized Disney Vacation Planner, will be in touch soon!
Feature Photo: The Wrap