William Gallagher
Analyst Dan Ives says that sports channel ESPN is the "perfect fit" for Apple TV+, and predicts Apple will acquire the station in the next six to nine months.
ESPN is currently owned by The Walt Disney Company, and there have been ceaselessly wild predictions that Apple should or must or will buy the whole Disney firm. Now Wedbush analyst Dan Ives is scaling down those expectations by focusing solely on ESPN, but at the same time is adamant that Apple will buy it.
"I believe it's a matter of when, not if ESPN and Apple get together," Ives said on CNBC's "Last Call" show.
"I think Apple is really the perfect fit. And I think this is something for Cupertino that they're looking to go after. Live sports content is the golden goose."
Rather than an acquisition, Apple has previously been rumored to become a strategic partner of ESPN.
Ive says that's possible, but is certain Apple will buy ESPN outright instead. His comments follow how Lionel Messi's joining Inter Miami CF has doubled subscriptions to Apple's MLS season pass.
He argues that Apple TV+ needs content and that sports will give it that, plus the costs of sports rights mean it will be the largest firms who get them.
"It's a new age," he continued. "And I think when you look at Apple, I mean, you're talking about coming here historically has never done acquisitions of this size, but you have 200 billion that they could ultimately go after and more."
"And I think it's just the start of Apple, Amazon, and others just going more and more after sports content," said Ives. "You look at ESPN, to me, it's just the perfect fit for Apple. either as a strategic partnership minimum, but we believe an acquisition could clearly happen here as we look into next six to nine months."
Buying ESPN is a "no brainer"
"ESPN as an acquisition or strategic partnership to Apple a no brainer," wrote Ives in a note to Wedbush investors seen by AppleInsider. "There is only one asset in our opinion that would accomplish this goal [of live sports on Apple TV+] and it potentially could be on the table depending on the Disney strategic overview and ultimately where [Disney CEO Bob] Iger and the Board land on this asset."
"We believe Apple would be much more interested in the ESPN asset than Disney overall as Cupertino is focused on a number of other key strategic initiatives with an acquisition of the Mouse not making a ton of sense in our view," he continued. "That said, acquiring ESPN ($50 billion+ price tag likely) would make a ton of strategic sense, gain valuable sports content, major TV rights across each of the major professional and college sports packages, and change the cross-sell opportunities and attractiveness of Apple TV looking ahead while putting Apple on the sports map globally speaking.
ESPN is an American channel and Apple has shown that it tends to want global rights to any sport it covers. It is possible to watch ESPN overseas, but in each territory where it's available, it is bundled with other services and it's not clear how the potentially complex contracts would work if Apple wanted to bring the service under its own streaming network.
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17 Comments
If ESPN is so good money making asset, than why Disney want to sell it? Apple does small selective deals that Apple knows worth and can generate short/long term revenue stream and overall value for Apple's product strategy. IMO Apple may get into some short of ESPN partnership with Disney for AppleTV+ than outright buy it.
Assuming Disney would willingly sell, I'm in favor of Apple buying ESPN under two conditions:
1. I don't want the monthly cost of Apple TV+ to automatically increase by $10 or $15 for all subscribers regardless of whether they watch sports. ESPN's (and Disney's) profits over the years came from the fact that cable/satellite/streaming bundle subscribers pay for ESPN whether or not they watch it. I like the price of Apple TV+ where it is now (even accounting for the price hike in late 2022).
2. Post-acquisition, ESPN should be an optional monthly add-on to Apple TV+, but the price needs to be reasonable. I would be willing to pay, say, $9 or $10/month for ESPN during college football season. The problem with this idea is that other recent media reports speculated that Disney would need to charge consumers $15 to $20/month to make ESPN available on its own (or as a new part of the current ESPN+ streaming service) just to break even on exorbitant sports licensing costs. Presumably Apple would have to do the same.
An even better thought is for Apple to make certain broadcasts available to regular Apple TV+ subscribers without a price increase or add-on requirement. For example, it would be fantastic if I could watch College GameDay on Saturday mornings and the national Saturday night college football game on Apple TV+ as a regular part of my subscription. Such an offering might entice a portion of Apple's subscribers to buy an ESPN add-on that would pay extra for access to every live football broadcast on Saturdays, Sundays, and Mondays.
I'm a sports fan … but I no longer subscribe to any cable/satellite/streaming TV bundles because I don't want my money feeding into the unreasonable escalation of the cost of college and professional sports. Yes, it means I miss seeing a lot of games unless they're on over-the-air TV … but that was the only choice I could make. Unfortunately, it would probably take another 100 million people making the same choice to actually change things.
I was about to dismiss this as more baseless Wall Street blather until I saw that it came from Dan Ives. He has a pretty astonishing record in his coverage of Apple--82% of his calls on Apple have been profitable. That doesn't necessarily mean he is right about ESPN, but this is about as good a truly "ediucated guess" as you're going to get.
However, that said, I'm not sure why ESPN is a great fit for Apple when it has become a problem child for Disney. In the heyday of linear cable, ESPN was an incredible cash machine for Disney, but so much has changed with live sports licensing and, of course, the rise of streaming, none of which has been great for ESPN. I don't see how Apple ownership would change that equation. At best, I could see where "ESPN on Apple TV+" as a branding play would make live sports and Apple TV+ more synonymous in the minds of consumers, and maybe that's enough, but ESPN as a business still seems very troubled.
I may be commenting using bad knowledge.
ESPN is a channel that doesn’t own any sports league or teams itself.
it likely has a small portfolio of broadcasting rights arrangements primarily cantered on the US.
In football there are developments where the sports teams themselves go into broadcasting with Real Madrid TV being a great example serving a global audience.There is an app for that and Apple can just sell a season pass and be the go to market aggregator.
No need to buy ESPN. Waste of cash
Jeremy Allen White is white hot right now thanks to the breakout success of The Bear. This should get a lot of buzz.