Now the word is that Disney CEO Bob Iger wants to stay in charge as long as he can — and then sell out to Apple. So we're right back with more analysts saying this is what will and what must happen — but it still won't.
The rumor that Apple will buy Disney is as old as the iPod. And, you'd think that analysts would have figured out by now that it isn't going to happen.
Or at least they should have begun to see that clickbait headlines about why Apple must buy Disney have to be losing their pull as the years go by and Apple does nothing of the sort.
We wrote most of this piece in November 2022, when Bob Iger returned as CEO, three years after he stepped down. And it's true that during those three years, Iger said there had been a point where a merger between Disney and Apple could have "gotten there."
Only, you have to forget that Iger also said that this was when Steve Jobs was alive. Very specifically, the two men had never once spoken about a deal.
That's apparently not an important detail. At least, not if you're a financial analyst or social media manager who knows the value of a spicy headline.
That's solely what this claim of Apple buying Disney comes down to. It is the statistics and the financial analysis of how much attention you can get by saying it will happen.
The Iger Sanction
Bob Iger was this very impressive CEO of Disney, a heavyweight success in a difficult job, and his leaving the firm was a huge loss. Since then, though, he's proved to be a spectacularly out of touch businessman.
First he chose to say, while at a billionaire's retreat, that the Writers' Guild of America was disappointingly unrealistic in its demands for a 0.2% pay rise. He did then try to atone for that by saying how much Disney values creatives, but the company also removed major series from Disney+ solely in order to save on paying royalties to them.
Now in the latest update to the saga, the claim that Iger wants to sell out to Apple as his last act as CEO, comes from a report about his time away from that role. According to CNBC, Iger stepped down as CEO but never let his successor run the company.
His replacement, Bob Chapek, did introduce unpopular moves, but they're now ones Iger is continuing, such as ultimately the idea that Disney can divest itself of some parts of the company. It's often rumored that Disney will sell off the ABC network, and even more often that it will sell ESPN.
The latest chapter of the "Apple will buy Disney saga" is a 15,000-word rundown of Iger's interference after leaving Disney. CNBC reports that "more than a dozen past and present Disney executives said privately they believe Iger's desired end game is to stay as CEO for as long as possible and then sell the company to Apple."
These executives could well be right about what Iger wants, but that doesn't mean he's going to get it.
"He's [Iger] going to sell the company," a source described as a Disney insider who used to work for Iger, told Yahoo Entertainment in November 2022. "This is the pinnacle deal for the ultimate dealmaker."
Maybe this really was a Disney insider. Maybe it was someone passing by in a Star Wars Stormtrooper outfit. The latter seems most likely, since when they shoot, they don't hit anything either.
We've been here before and we'll keep coming back
Either way, this is only the latest in a very long line of claims that Apple is certain to buy Disney and do so absolutely any day now.
According to entertainment and internet analyst Laura Martin of Needham & Company, it's the headset, stupid.
"You can't actually force the Walt Disney Company, unless you own it, to make content specifically for the Vision Pro headset or for Apple," she told CNBC. "And if the creative content guys at Star Wars or at Pixar or at Marvel don't want to do it, they don't have to do it."
"Because Disney is all about making content that maximizes revenue streams to all of its content," she continued. "If Apple owned [Disney], it could say, 'Look, we want exclusive content for the 100,000 units of $3,500,' and and it could actually drive penetration of that $3,500, you know, headset by having exclusive Disney content because they're the best storytellers on Earth."
It's not as if anything Martin says there is strictly wrong. But by the same logic, movie theaters should buy Disney so that they could get exclusive films instead of seeing everything going straight to Disney+.
Or equally, Disney should buy the Vision Pro from Apple because then it could ensure it gets its content onto the device.
Disney seems to be doing just fine with getting on to the Vision Pro.
"We're so proud to yet again be partnering the greatest storytelling company in the world with the most innovative technology company in the world to bring you real-life magic," said Iger at WWDC, "and I'm excited to announce that Disney+ will be available on day one."
This is not the first time that anlayst Laura Martin has said Apple absolutely must buy Disney, and it's not the first time she's said it at a point after Apple should have realised this itself. Usually, though, she and so many others are saying it's streaming and Apple TV+ that mean Apple absolutely must buy Disney today.
Run the numbers
At one point an analyst did actually do some math. In 2017, analyst Amit Daryanani said there was a "confluence of events" that meant Apple should buy Disney.
That was "should," not "will," but Daryanani made it sound like Tim Cook would be an idiot to not do it. And — remember this was 2017 — Daryanani's calculations said Apple would have to take on significant debt to do it.
Right now, the Walt Disney Co's market capitalization is $175.4 billion. Apple has cash reserves of around $200 billion, according to Investors.com, which also believes the company should be giving that to investors, "the rightful owners," instead of acquiring firms.
So on paper, Apple has the money to buy Disney, whether or not it would be wise to cut down its cash reserves that much. In practice, too, it would not cost Apple $175.4 billion to buy Disney, it would be more.
You don't get to buy a company for exactly what it appears to be worth now, or there is no reason for the firm to let you buy it. Still, let's assume Apple could get Disney for something less than the $200 billion it has in loose change.
It's not just the price tag that matters
There's also the slightly significant fact that Disney has no real reason to want to sell out to the walls. Companies can be pressured into a sale by shareholders, but overall, Disney is doing well when looked at as a whole.
And, while the fans remain excited about Chapek being gone, it's likely to be more about the board wanting to make more money, and the company having a COVID fall-guy than anything else, given that he was mostly implementing programs that Iger built. Iger didn't come back to make a deal with Apple.
Yes, Disney has had a few under-performing years, and some expensive, high-profile missteps. There's COVID, of course, which shut down the parks for a while, and cut the capacity for even longer. The Star Wars hotel in Florida will be shut down soon, but this will generate a $235 million tax offset for depreciation of assets and impairment.
What was more predictable, though, was that its Disney+ streaming service would prove to be both a huge success and somewhat of a problem.
Two sides to Disney+
The Disney+ streaming service launched in November 2019 and aimed to get between 60 million and 90 million subscribers by 2024.
The problem is that the service is still in its early days when it requires investment in technology as much as anything else. Then while it has an enviably gigantic library of material, what drives new subscribers the most is brand-new programming.
And there is little that is more expensive than television programming with, for instance, "The Mandalorian" alone costing around $15 million per episode to produce. There are then other costs such as marketing, and other income such as from toys and the parks themselves, that are not counted at all in the streamer's accounts, but rather in the accounting of the company as a whole.
Disney knew it would lose money with streaming at first, and its financial earnings calls have continually forecast it. But it didn't expect to lose $1.5 billion because of it in the last quarter, up from about $1.1 billion a quarter ago, and $630 billion in the year-ago quarter.
This is complex, of course, more so than the numbers suggest at a first glance. The losses are tied to overseas sporting withdrawal, and impairment charges related to taking content off the service.
Even so, Disney+ is this massive success that is costing its owner much more than expected. It did very recently raise costs on Disney+ streaming, and it is doing to again on August 10.
Maybe, if you look at it just the wrong way, Disney could conceivably, possibly be the slightest bit vulnerable. Any firm buying it would be taking on the same problems and the same costs.
At present, those problems include the strikes by the Writers' Guild of America and of the actors' union, SAG-AFTRA. With Iger's tone-deaf attitude during the strike, and Disney's cancelling of projects weeks after they launch, there will now be writers and actors who will necessarily bring their projects to other studios first.
Doing what firms do best
Nonetheless, before the strike Needham analyst Laura Martin argued that Disney is great at making shows, while Apple is great at getting to audiences. Therefore, she insisted in May 2023, not only is Apple able to buy Disney, such an acquisition is necessary to make Apple TV+ competitive.
"So I think Apple is really doing a very mediocre job of streaming," she said on CNBC. "They just said they were gonna do a billion dollars in film finance [but] this is sort of laughable, because these companies they're competing with in content businesses are spending thirty billion dollars a year."
"Even Netflix, which is a single line business and streaming is spending $20 billion in round numbers," she continued. "So the notion that Apple is going to spend $2 billion on streaming and $1 billion on films, I think they're starting to get serious because what they're realizing is that services and hardware, which they've done today, actually do create consumer lock-in, but so does content."
"And the only content that you don't have to license every time you want to use it is if you own the IP, you own the intellectual property underneath it," said Martin. "And guess what the Walt Disney Company has? One hundred years of some of the best intellectual property, characters, and film franchises on Earth."
Martin is right about content, but it's not that this has suddenly become a new thing. Apple TV+ has been running since 2019, but it was in the works for years before that.
At one point it was rumored that Apple was in talks to buy MGM to get its library of content, but if that were true, it didn't happen.
Not only has Apple not bought MGM — nor Imagine Entertainment, at one point also reportedly in the frame — but it hasn't bought any studio. That doesn't mean it won't, but four years after launch, Apple is clearly not seeing acquiring a library to be a priority.
And then there is also this. Amazon bought MGM in a deal costing $8.45 billion.
Only Amazon knows whether it has added enough subscribers to pay for that, but outside of the business, it's likely that few viewers noticed the difference.
Laura Martin is right that content helps lock in viewers, and she's right that Apple could afford to buy Disney. But that does not make this the slam dunk she implies.
For one thing, as deep as Apple gets into streaming, it is still doing it to sell iPhones, it is not banking the business on getting the biggest audience for "Schmigadoon!" that it can.
Plus you can have the money to buy a firm the size and stature of Disney, but that doesn't mean it's easy.
It's not just up to Disney and Apple
Say Tim Cook burns to see more episodes of "Mandalorian," and Bob Iger is keen to see an Apple logo on Cinderella's Castle in the Magic Kingdom. The two firms are still so huge that any kind of deal would have to go to US regulators.
And that is precisely where the latest crop of rumors in August 2023 have sprung from. It's as if it's taken months for analysts to realize the size of the firms was a problem — and then to bafflingly come to the conclusion there that an apparent solution is to cut down Disney.
The Hollywood Reporter says many analysts this position. If Disney sheds some of its many companies, they believe, it would make it easy for Apple to buy it.
It is true that Iger has referred to ABC and ESPN as Disney firms that "may not be core" to the company's business. Disney could sell off those channels, if it could find a buyer that would agree to terms which reportedly require Disney still controlling the brands. It could conceivably divest itself of any parts of the company, right down to its Disney Land and Disney World resorts if it wanted to.
Apple might want parts of ESPN. It might also want parts of ABC, but that's less certain. Apple does not historically buy struggling parts of businesses, nor is it that interested in being second-fiddle to another company controlling the property.
There comes a point for Disney where this becomes practically asset-stripping. What's left may be a smaller Disney, but it's also one that has lost some of its attraction.
Plus it's unlikely that Disney could winnow away itself enough that the government would wave through a sale. Most recently, a US judge refused to allow much smaller publishing houses Penguin Books and its rival Simon & Schuster to merge, in what Reuters says was merely a $2.2 billion deal.
In that case, the argument was that merging these two firms would cut competition, and also lower advances for their authors. Disney might want to lower what it pays creatives, but even before dissing them on the picket line and removing their shows from existence, that's what got it into costly hot water with actor Scarlett Johansson.
Apple doesn't buy firms on a whim
We've all spent more on something than we should, just because we wanted it. But we're not Apple, which has no reason to want Disney, ESPN, or ABC other than how that would balloon out its Apple TV+ library.
Apple's had the chance to buy libraries of content before, and even reportedly held some preliminary discussions with MGM. But it passed on that deal, and hasn't introduced any others.
Steve Jobs bought Pixar from Lucasfilm because the price was right. Disney bought Pixar because its animation studios were no longer creating the hits that it needed. And then Disney bought Lucasfilm because George Lucas was ready and the price looked good.
So huge companies will buy other huge companies, but only when the price is less than the value they will get from it, and they believe that the regulators won't get in the way. Disney is not ready to be part of a larger synergy machine than its own, nor does Apple appear to have any inclination to get into the theme park business, even in part.
Disney is still not in a weak enough position to make it a bargain for Apple, nor does it have anything Apple especially needs.
And, in case you were keeping track, since its first publication, this piece has been revised eight times to reflect the most recent talking head pontificating about the possibility because it would be good for investors, or Iger himself.
But still not good for Apple.