Justin Sullivan/Getty Images News
It is a tale as old as time.
Disney (NYSE:DIS) buying X, or Disney buying Y – or to the more extreme case X buying Disney.
Of course, this was before Elon Musk turned Twitter into “X”… but you get the point.
Acquisition rumors involving Disney are nothing new, but the one that seems to re-emerge every so often is Disney being the one acquired. The majority of these rumors center around Apple (NASDAQ:AAPL) doing the buying – but outside of the click-bait headlines and pure speculation nothing ever happens.
And for good reason.
And now with the news cycle once again coming around to the “Apple should buy Disney” talk, it seems like a good time to explore why there is a better chance of you finding a genie to grant you three wishes than this type of deal not only happening, but going through to completion.
First as always, some background.
Once upon a time then-Apple CEO Steve Jobs and once-and-current CEO Bob Iger were close friends. This wasn’t a “Hollywood” friendship either – the two men legitimately liked and respected each other. When Iger returned to Disney earlier this year he even cited Jobs as a reason.
“The person that I think most of, that I was fortunate enough to have observed very closely, is Steve Jobs. He was brought back to a company that he had founded – very different circumstances. But speaking with him when I did, and reflecting on what his experiences were – I’ve taken a lot from that.” – Bob Iger
The Disney deal to buy Pixar also came out of that relationship.
“I said, ‘I’ve got a crazy idea, and can I come up and talk to you about it?’ Anyone that knew Steve would know that, if you said to Steve, ‘I have a crazy idea,’ he would have to hear right away.” – Bob Iger
And that’s what happened.
Eventually a deal was made and Pixar has been a prominent part of Disney ever since.
Iger even wrote a touching tribute to his friend in Vanity Fair years after Jobs passed away… so to say the two men were fond of each other is no small statement.
Disney and Apple’s relationship continues to this day as when Apple revealed its new mixed-reality headset, there was Iger showing how Disney+ would be right there as a partner.
So again, it is not hard to see why people think Disney and Apple could one day be one company, but that window has likely closed for a variety of reasons.
But let’s put that aside for a second.
Let’s explore the bigger question – if the two sides were to agree, would this even be valuable to Apple? Forget what Disney may want, does Apple really want to get into the theme park and hotel business? Because while there is so much more to the House of Mouse… that’s the first thing people think of when it comes to Disney.
Apple is a tech giant… an innovator of innovators. It can bend the will of the public to its whims.
Remember, they were the ones that decided wired headphones had out served their usefulness – and just like that, poof – gone. Apple removed the corresponding jack from their devices and AirPods became just as common as iPhones.
That’s just one example.
They also convinced people to pay substantially more for what’s really a souped-up Roku with their Apple TV device. That is the type of Jedi mind trick that Disney once had the ability to pull off just as effortlessly.
Apple also has a wide range of subscription services ranging from music to scripted content to games to news to fitness – that are combined, over-delivering as we saw in the latest earnings report. That’s also not to even bring up the two Emmy wins for Best Comedy and the Oscar for Best Picture – something that continues to evade Netflix which has been going at it for a much longer time to less success.
Now to be fair to the supporters of this type of deal, this whole space is still new to Apple and for a while it may have been easier to just buy a company in the space outright. And it is very likely Jobs and Iger had those same thoughts as Iger hinted at in his biography.
However, this was pre-streaming when the traditional model – was the only model. So if Apple was looking to get into entertainment, buying Disney was a logical way to fast-track those plans.
All that to say – in 2023, knowing what we know now, would it really make sense to spend untold billions to buy a company that operates so far out of their wheelhouse in a key area – when you can just continue release new devices people are already buying at high levels and price points?
If anything, what is more in the realm of possibility is Apple and Disney teaming up tied to ESPN and pushing the sports aspect further down the field. Although even that may not be something needed for Apple.
As it stands Apple presently has an MLB deal, owns MLS streaming rights and is the sponsor of the NFL Super Bowl Halftime show – so its sports bench is not exactly light. And in the near future when the NBA rights come up for renewal… along with action sports (WWE/UFC), US Open and college football, if Apple wanted to wrestle them away from their current owners, it would cost a lot less than the $50 billion some analysts have put as the value of ESPN solo.
For perspective, Disney and WBD pay less than $3 billion for NBA and Comcast pays just over a quarter of a billion for WWE.
All of that aside – then there are the legal ramifications.
If you think you saw a fight when Amazon (AMZN) bought MGM or Microsoft (MSFT) purchased Activision… buckle up.
In both those cases that was a company purchasing a studio, whereas here it is a company buying another company.
And these aren’t your typical companies.
These are two giants in their field and a merger would create a monopoly like you’ve never seen. While ultimately the Amazon and MGM controversy was all smoke and no fire and the courts eventually did allow the Microsoft/Activision deal to go through, this is one level up from there and would very likely face extra scrutiny.
Apple buying Disney would fundamentally change the way any and all future deals of this kind would go.
That’s also not limited just to entertainment companies either – that’s in general.
A leader in tech purchasing a leader in entertainment (and its various fields) is a situation where the only winners would be the lawyers litigating the inevitable law suits.
Let’s also stay on that path for a minute because while the popular thing is to say we are ripe for more takeovers and mergers in this area – we actually are not.
Yes, maybe in that company/studio example impacting Activision or MGM – but not higher. The lone example, that is just as often discussed, is Paramount and Comcast… which can’t happen in its current form.
It is impossible – full stop.
Regulators would never allow the parent companies of CBS and NBC to unite and have those networks under one roof. The only way it works is for Comcast to excise NBC or Paramount to de-couple from CBS (which effectively returns CBS to what it was pre-merger).
In either case I don’t see that happening.
The strength of these companies is in the power of their collective selves and in a streaming first world they all – Apple and Disney included – have successfully entered the space.
Also we haven’t even got to what it would be by way of layoffs and job loss.
This industry is wounded at the moment – this type of merger would do little to stop the bleeding. So while it sounds like a fascinating option in theory… it’s not.
Instead the industry – and the experts that cover it – should focus on how it should pull itself out of the self-inflicted tailspin it is in verses plunging even further into the abyss.