Rumors are swirling that Apple could put in a bid to purchase ESPN from Disney, and one major analyst argues it is a “no-brainer.”
Key Details
- Rumors are swirling that Apple is debating whether to purchase the Disney Corporation, which CEO Bob Iger denied last week during Disney’s earnings call.
- Wedbush managing director Dan Ives argues that it would still be viable and smart for Apple to acquire ESPN for $50 billion.
- Ives tells Fortune that live sports is the “golden goose” of content and would make AppleTV+ subscriptions more appealing.
- He believes that broadcasting ESPN content on Apple’s subscription service would allow it to compete more directly with HBO Max and Netflix regarding market share—controlling ESPN’s 74 million regular broadcast viewers.
Why It’s News
As we previously reported, the Disney Corporation has struggled consistently with profitability for the past two years, as the company, which owns 27% of the film industry, is overburdened with too many projects and too few subscriber dollars and box office tickets. Since Iger returned to power in November, the company has laid off 7,000 employees, reduced the number of expensive projects it is working on, and hiked subscription rates—cutting losses in half.
Iger has clarified that nothing is off the table to help Disney resolve its severe ongoing profitability woes, and this might prove to be an opportunity for Apple, which is eager to break into the film industry as a major distributor and streaming service. Iger has already said that ESPN will inevitably move from broadcast television to streaming and believes that a third-party partnership for content distribution could easily work to its benefit.
Ives argues that a direct sale “would make a ton of strategic sense,” allowing Apple to “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, while putting Apple on the sports map globally.”
He fully expects that Apple’s reluctance to make major acquisitions will make the deal challenging, with the last major company purchased by the tech giant being Beats in 2014 for $3 billion. The purchase could also set off Federal Trade Commission alarms, which is currently deadset against major tech mergers and acquisitions at the moment. Iger may also hold to his commitments to retain ESPN against the pressures of low profitability.
