If we do the exercise of thinking about the brands that shape today’s world for better or worse, we will surely all agree on the first ones that come to mind. And yes, there are Apple and Disney.
The first, the company made an icon of technology and the most valuable in the world today. The second, the one that has shaped a good part of the stories with which today’s society has grown up. But, Can we imagine them together?
There are several factors that have made this option at least put on the table, and they are factors that are very difficult to repeat again. Disney, despite its strength, is going through a particular crisis which has even made Bob Iger, its retired CEO, have to return to take the reins.
And now, Apple and Disney share more interests than ever: the streaming market, the rights to major franchises and sports, and a cultural and business vision with a similar perspective. In addition, both companies have historical ties in common, such as their mutual relationship through Pixar and Steve Jobs.
But, What has lit the fuse for a possible operation like this? The first thing to clarify is that they are speculations (But what speculations!). The speculation grew after Bob Iger expressed his opinion on the evolution of linear television networks in an interview with CNBC.
The origin: Disney seems interested in divesting part of its television business
In her Iger hinted that Disney’s linear television networkslike ABC and FX, may not be critical to the company’s business.
These words especially resonated because a few days earlier, an anonymous veteran Hollywood executive shared similar thoughts with The Hollywood Reporter: the possibility of an agreement that would shake the foundations of the industry. Yes, Apple acquiring Disney.
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This idea, which was initially met with skepticism by some executives, continues to resonate in the halls of Hollywood.
The executive specifically said the following:
“I do not think that [Apple] bought Disney as it currently exists, but if you see Bob Iger start divesting things… it’s like he’s preparing for a sale. And clearly there is no buyer like Apple.”
Shortly after this reflection, Bob Iger appeared on television and hung the “possible sale” sign on Disney’s television businesses. Thus, we begin to glimpse the possibility of a smaller Disney that could become an irresistible acquisition target.
But is it economically viable?
The fundamental question that arises is whether an operation of this magnitude would be economically viable. Apple, a company with $62 billion in cash and a market capitalization of $2.8 trillion, undoubtedly has more resources than anyone to undertake an acquisition of such magnitude.
Although Apple is generally not interested in buying entertainment studios, Disney is Disney, and this situation could be an exception due to the immense value of the company’s intellectual property. and its position as the most valuable brand in the entertainment industry.
But it certainly wouldn’t be easy. Anti-competition surveillance would immediately be on the table and Disney’s valuation of around $230 billion would not make it easy either at a fiscal, cash or regulatory level.
Regulation is a key consideration in this matter. The FTC failed to block Microsoft’s acquisition of game publisher Activision Blizzard, which bears similarities to a possible deal between Apple and Disney, as it involves a tech giant looking to acquire a content company. Microsoft pledged to continue offering key games to its competitors, which persuaded the judge in the case and could provide a path forward for a Disney deal with a tech company.
Apple and Disney, if this purchase-fiction occurs, should come to propose a similar exit.
If Disney can be bought, it is now. And if Apple is interested in entertainment, it is also now
That does not prevent Disney from going through a particular crisis that no one has seen coming very well. Despite overcoming the pandemic, it seems that the investments made in Disney Plus and its productions have not been entirely profitable in recent years, which has added to the hangover that COVID did leave in its theme parks. Which, we must not forget, are its greatest asset.
Bob Iger, who returned to the CEO role in November, is not only dealing with an industry in flux, but he has also lost many of his key collaborators who were by his side during the company’s golden years. The retirement of figures such as general counsel Alan Braverman and film studio chief Alan Horn, along with the departure of chief financial officer Christine McCarthy, have left a void in Disney’s top management.
This scenario could explain Bob Iger’s quest to collaborate again with former top Disney executives, such as Kevin Mayer and Tom Staggs, who, despite having been passed over for the CEO position, have recently been named consultants to the company.
One of the expert observers consulted by Hollywood Reportersuggests that Disney could choose to load these assets with debt and sell them to private investors.
According to his estimate, these assets could generate around $7 billion a year in profits and could be sold for up to $50 billion. This strategy would allow Disney to reduce its debt load to $20 billion, an important consideration in any acquisition transaction.
Meanwhile, Apple is in a moment of great success with its streaming service Apple TV +. The company has invested heavily in original content and has managed to attract a significant subscriber base. Added to this is the icing on the cake of recent months: the MLS rights and the arrival of Messi with his agreement to the league.
Despite this, just because it is the best time for something does not mean that it is possible, and a situation like this continues to seem very far away as soon as we let it cool down a little. Although… who knows if it is the first step towards a process that could culminate in several years.