The latest rumors about Apple buying Walt Disney Co. aren’t new – they go back to Disney’s 2006 acquisition of Pixar. That made late Pixar Co-founder Steve Jobs into Disney’s largest shareholder and a member of its board. Of course, Jobs was also co-founder of a little computer startup you might have heard of called Apple, and at the time was in his second tour of duty as its CEO.
After Disney bought Pixar, the logic held that it was only a matter of time before Apple returned the favor and bought Disney. Those rumors have circulated on and off for nearly 15 years, and they got a new injection of life last fall. That’s when former Disney CEO Bob Iger noted in his autobiography that had Jobs not died in 2011, a Disney/Apple combination might have happened after all.
“I believe that if Steve were still alive, we would have combined our companies, or at least discussed the possibility very seriously,” Iger wrote.
Fast-forward a few months, and it seems the Apple/Disney acquisition rumor is again riding high amid the wave of uncertainty crashing through markets, thanks to the coronavirus epidemic. This time, it’s been ushered in by Rosenblatt Securities Analyst Bernie McTernan, who wrote in a note that now might be a golden opportunity for Apple to snap up Disney at a bargain price and generate a win-win for both firms.
After all, Disney and many other firms in the travel and entertainment vertical are taking a beating at the outbreak’s hands. Disney’s Asian parks were closed for much of the first three months of 2020, and as of yesterday (March 16), they were joined by the company’s U.S. parks. That has helped to push Disney’s stock price down approximately 35 percent so far this year.
McTernan wrote in his note that this presents a prime opportunity for Apple to beef up its Apple TV+ streaming service by acquiring Disney and its rival Disney+ streaming offering. As a recent entrant to the streaming wars, Apple TV+ has thus far struggled to have enough original content to be competitive. “Disney+ could solve Apple’s content problem, as we believe AppleTV+ is off to a relatively slow start,” McTernan wrote.
By contrast, Disney+ is not off to a slow start. The service signed up 26.5 million subscribers by 2019’s end, counting 28.6 million as of Feb. 3.
McTernan also outlined in his report that the market’s current volatility could play to the advantage of “mega-cap companies with large cash balances and whose equity outperformed Disney.” He added that Apple is in a particularly strong pole position for that kind of acquisition, firstly because of the relative underperformance of Apple TV+ so far, and also because the computer giant currently reports about $107 billion in cash and securities on hand.
“The upside from acquiring Disney would be securing their content/streaming strategy and potential synergies [and] adding the emerging Disney ecosystem to the iOS platform,” McTernan wrote, noting that Disney would gain access to more than one billion Apple devices, where its content would be tightly integrated. A merger might also add stability at the top of Disney, where Iger abruptly departed the CEO role that is now held by Bob Chapek.
This speculation, however, is merely that – speculation. McTernan acknowledged as much in his note, as neither firm has given the slightest indication that they’re even considering such a deal. Nor is there any certainty that both firms would want a merger – particularly Disney, which would get the deal’s losing end by selling to Apple at a fire-sale price.
While Disney’s stock price is down, the company is still one of the world’s most valuable brands, and no credible source on Earth thinks that the current economic slowdown will bankrupt the company. So it seems unlikely that Disney would agree to an acquisition at fire-sale pricing. And remember, Disney’s first feature-length movie was 1937’s “Snow White and the Seven Dwarves” – and if there’s any lesson to be learned from that story, it’s to beware of people offering apples.
Then again, if you asked people in December what the odds were that both Disney World and Disneyland would be closed indefinitely by March due to a global pandemic, most people would likely have said something in the neighborhood of 0 percent. The range of what’s likely or even possible are shifting day by day. And as any Disney princess worth her tiara can tell you (probably in song), you’re only a few unlikely events away from having a completely different destiny.