The Apple-Disney deal that could actually happen
- Iger’s plans to remake Disney have rekindled talk of an Apple deal.
- With other tech giants reportedly circling ESPN, it’s more likely than ever that Apple could make a move for it.
- Experts lay out how an ESPN deal could work to Disney’s and Apple’s benefit.
A year after returning to Disney as CEO for the second time, Bob Iger has begun to lay out his strategy for the media conglomerate: He has placed a for-sale sign on its linear TV assets, which include ABC and cable networks such as FX and National Geographic, and has stated that he is looking for content or distribution partners to assist ESPN in going direct to consumer.
These moves have reignited the long-held belief that Disney will sell all or part of itself to Apple. Some believe Iger’s ultimate goal is to reduce Disney to the parts that would be most appealing to a buyer, such as the film studio and the streaming business.
And, according to some analysts, Apple has long been seen as the most likely buyer of all or a portion of Disney. Both companies exude prestige. Iger had a long relationship with Steve Jobs prior to Disney acquiring Pixar from Jobs, and the Disney CEO served on Apple’s board of directors until 2019. Under Apple CEO Tim Cook, the relationship has continued; in June, the two companies announced a partnership in which Disney would create content for Apple’s Vision Pro mixed-reality headset.
With $62 billion in cash and cash equivalents and a $2.8 trillion market cap, Apple can certainly afford any amount of Disney it wants.
Critics have long pointed out that Apple, which is fiercely protective of its culture, has never done a big deal and has done just fine. A Disney-Apple merger would also face regulatory scrutiny from a Biden administration that has been hostile to large corporate mergers.
“Not doing a big deal hasn’t impacted them, and if it ain’t broke, don’t fix it,” said Gregg Abella, CEO of Investment Partners Asset Management.
Then there’s the question of what Disney would sell, aside from the linear TV assets for which talks and offers have been reported. Iger believes the studio, streaming, and parks businesses (in which the company recently announced plans to invest $60 billion over the next decade) are the most valuable. So, taking its businesses one at a time, it’s difficult to see Disney selling any of them. These three companies are also inextricably linked by the company’s iconic intellectual property. It’s difficult to imagine running theme parks or streaming services without owning the popular franchises that fuel them.
The parks and studios, which include Star Wars and Marvel as well as Disney’s vast legacy IP, “are really core to the company’s history,” David Rogers, a Columbia University business professor and author of “The Digital Transformational Roadmap,” told Insider. “And the theme parks are profitable.”
Buying theme parks and cruise lines would be a massive strategic shift for Apple, not to mention a culture shock. People believe Apple needs more content, particularly the kind of valuable IP held by Disney, to build up its streaming service, AppleTV+, but the company has never expressed interest in purchasing a studio. Needless to say, Apple is not on anyone’s list of potential buyers for Disney’s dying linear TV businesses.
But there is one asset that appears to be of interest to Apple — and for which Disney has already indicated an openness to options: ESPN.
Disney intends to launch a streaming version of ESPN, but it will require assistance with distribution and marketing in order to generate enough revenue from viewers and advertisers to continue paying for the platform’s expensive sports rights.
It has already begun discussions with potential partners with significant distribution potential, including Verizon and Amazon, according to reports.
Finally, there’s Apple. While AppleTV+ remains a niche streaming service, it has recently expanded its offering to include live sports. According to Antenna data, its MLS-Messi partnership has recently resulted in an increase in signups.
ESPN could help drive viewership and subscriptions to AppleTV+, one of the units powering Apple’s expanding services business, which in turn keeps core device sales humming.
Wedbush Securities analyst Dan Ives, a longtime Apple supporter who recently argued for Apple to acquire ESPN, sees sports as a way for Cook to drive the tech giant’s streaming future. It could continue to acquire its own sports rights, but many are locked in for years, and collaborating with ESPN could be a one-stop shop. Ives envisions a deal in which Apple pays for exclusive access to ESPN content and game broadcasts, with an eventual acquisition. According to Ives, acquiring ESPN would cost Apple close to $50 billion.
Given the value ESPN could bring to Apple, he believes the company will not allow it to fall into the hands of one of the tech rivals who are also expected to be interested.
“Google, Meta, and others will look at live sports content as well,” Ives told Insider. “Amazon would face increased FTC scrutiny as a result of its Prime membership.” But, in the end, I believe Apple is the only serious bidder. It checks all the boxes. They also want live sports content, which would be a huge growth engine. I believe it is a matter of when, not if, Apple acquires ESPN.”
