A few weeks before Bob Iger’s CNBC interview where he hinted that Disney’s linear TV networks may not be central to the company’s business, there were discussions in Hollywood about the possibility of Apple acquiring Disney. While many executives were skeptical about the idea, one person believed that if Disney started divesting certain assets, it could pave the way for a potential sale to Apple.
The idea of Apple buying Disney is not entirely far-fetched. Apple has a massive cash reserve of $62 billion and a market cap of $2.8 trillion. While Apple has previously shown no interest in acquiring a studio, the combination of Disney’s invaluable intellectual property and its position as the most valuable brand in entertainment might make it an attractive prospect for Apple.
The relationship between Disney and Apple has a longstanding history. Steve Jobs served on Disney’s board of directors from 2006 until his death in 2011, and Bob Iger joined Apple’s board shortly after Jobs passed away. However, Iger resigned from his position on Apple’s board in 2019 when Apple announced its entry into the content business with Apple TV+.
Hollywood executives have predicted that the entertainment industry will continue to consolidate, leaving only a few major platforms standing. These platforms are expected to be Apple, Amazon, Netflix, and possibly one other. If Bob Iger shares this vision, finding a suitable home for Disney could be tempting.
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Multiple sources reveal that Iger, who returned to the CEO position in November, is facing significant stress. Many of the top executives who supported him during the company’s prosperous years have left. Additionally, Iger is now bridging the gap between former executives Kevin Mayer and Tom Staggs, who were previously passed over for the CEO role but are now consultants for the company. This reunion could help navigate the challenges of trimming costs for Disney+ and potentially assist in selling off linear TV assets such as ABC and cable channels like Freeform and National Geographic.
Industry insiders speculate that Disney might consider selling off certain assets to unload debt. It is estimated that these assets, generating around $7 billion in profits annually, could be sold for $50 billion. Disney could use $25 billion of the profits from the sale to reduce its debt load to $20 billion. Additionally, there are rumors of Disney considering selling its India businesses and majority stake in Nat Geo and A+E Networks.
Analysts have been discussing the possibility of Disney being acquired by Apple for some time. Needham & Co. analyst Laura Martin suggests that Disney could be purchased in the next three years, with typical takeover premiums ranging from 30 to 40 percent. Martin also sees the purchase as an opportunity for Apple to drive adoption of its forthcoming Vision Pro augmented reality headset. She believes that the synergy between Apple’s wearable technology and Disney’s content could be a compelling strategic fit.
Nevertheless, not everyone agrees that a deal between Apple and Disney is imminent. Anthony Sabino, an attorney and professor, believes that Iger’s contract extension and the potential sale of Disney’s linear TV assets indicate that Disney’s board is committed to Iger guiding the company and not selling it off. Additionally, any potential deal with Apple would face intense scrutiny from the Biden administration, which has been aggressive in blocking major deals.
There are precedents set by recent lawsuits that could impact a potential Apple-Disney deal. The FTC’s struggle to block Microsoft’s acquisition of Activision Blizzard demonstrates that a tech giant acquiring a content company is not uncommon. However, the DOJ successfully blocked Paramount’s sale of Simon & Schuster to Penguin Random House, arguing that the merger would harm authors looking to sell their work. If Disney were to enter into discussions with Apple, it may need to divest certain studio assets to prevent antitrust concerns.
Disney fans and shareholders, who are loyal to the company’s core entertainment and theme park businesses, may be skeptical of a tech company’s commitment to these assets. However, with over 1.8 billion shares outstanding, the decision ultimately lies in the hands of the shareholders. The potential sale of Disney to Apple is a topic of debate and speculation among industry insiders, analysts, and fans alike.
