Could Disney Sell ESPN to Apple?
Prior to Disney’s third-quarter earnings call, rumors began to swirl that Apple was possibly considering an acquisition of The Walt Disney Company.
When Disney CEO Bob Iger announced on CNBC that DIsney’s linear television networks like ABC and FX “may not be core” to the company moving forward, he seemed to indicate to Wall Street that Disney was open for business.
While Iger may be looking to sell specific assets as a way of clearing up the company’s books and priming it to enter into the streaming-age, Wall Street has continued to speculate that a wholesale merger of Disney and Apple remains a possibility.
“If they don’t sell, Disney will be competing against those [tech] companies in an industry with deteriorating economics (because they never need to make money from content), we believe,” Needham & Co. analyst Laura Martin wrote.
Why An Acquisition By Apple Makes Sense
On one hand, an acquisition of Disney by Apple may not be as far-fetched as some naysayers believe.
The Disney library would certainly be attractive to Apple, as it continues to position itself as one of Hollywood’s top producers.
Additionally, there is the long-standing relationship between the two companies. Steve Jobs served on Disney’s board of directors from 2006 until his death in 2011.
Iger meanwhile, joined Apple’s board shortly after Jobs died. He only resigned that position when Apple announced it was getting into the content business with Apple TV+.
In his memoir, Iger even asserted that had Jobs lived, Disney and Apple would have likely joined forces.
“I believe that if Steve [Jobs} were still alive, we would have combined our companies, or at least discussed the possibility very seriously,” he wrote.
Iger Speaks Out (Kind Of)
During Disney’s Q3 earnings call, Iger addressed the rumors of a possible acquisition by Apple.
While stating that he doesn’t “obsesses” over the idea, he didn’t exactly reject the notion out of hand.
“I just am not gonna speculate about the potential for Disney to be acquired by any company, whether they’re a technology company or not. Obviously, anyone who’d want to speculate such things would have to immediately consider the global regulatory environment,” Iger said.
Would A Sale Even Be Possible?
Whether or not Iger would want to sell Disney, however, the United States government would likely not let such a sale occur.
“It’s a given, it’s an absolute certainty that if there was some talk of Disney merging with somebody else, that would be scrutinized to the nth degree by the FTC, by the Department of Justice,” Anthony Sabino, an attorney and professor at St. John’s University says. “So that would be basically walking into a bear trap that I’m not sure any company would be willing to get itself immersed with.”
That ends that…or does it?
Apple Could Buy ESPN
Even if Disney can’t sell their entire company to Apple, could they still consider selling off some of their assets.
The most sought after property would likely be ESPN, which Apple could use to bolster its already strong sports business.
Currently, Apple has deals with Major League Baseball and Major League Soccer, and has previously expressed interest in partnering with the NFL and Pac-12.
Wedbush Securities analyst Daniel Ives, a longtime Apple bull, believes that ESPN would be the perfect acquisition for the tech giant.
“The massive appetite for live sports content remains the laser focus for Cupertino now to boost its streaming future and further tap into its massive installed base of 2 billion iOS devices worldwide,” Ives wrote. “We believe the answer and the shoe that fits for Apple is the golden ESPN assets which potentially may be on the table in one form or another as [Disney CEO Bob] Iger and the Board strategically and carefully look at Disney’s core assets over the coming months.”
Would Disney Sell?
While Iger and Disney brass have continually called ESPN a core brand for the business, they have also made it clear that they are looking for strategic partners to help guide ESPN into the streaming-era.
While a full acquisition of Disney remains unlikely, could the close relationship between the two companies help facilitate an ESPN deal?
Ives thinks it could. Additionally, the analyst argues that a sale, or major partnership “would make a ton of strategic sense” for Apple, helping it “gain valuable sports content, major TV rights across each of the major professional and college sports packages, and change the cross-sell opportunities and attractiveness of Apple TV looking ahead while putting Apple on the sports map, globally speaking.”
Between his admission that Disney may look to sell of assets, and his tepid denial that Disney could be sold outright, Iger has opened himself up to a world of speculation and rumor. Whether or not Disney makes any major changes to its company structure remains to be seen. Apple however, remains the company to watch.
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