First there were rumors that Disney was looking to buy Netflix. Now the scuttlebutt is that Apple may buy Disney.In what would be a mega-deal costing Apple upwards of $230 billion, the purchase is not that far-fetched and would result in a tech-entertainment giant valued at over $1 trillion.
Apple and Disney have had a close relationship ever since Apple sold Pixar to Disney. Steve Jobs sat on Disney's Board of Directors and was the largest shareholder of Disney stock. Upon his death, his wife, Laurene Jobs, took over his board seat. Bob Iger, Disney's CEO, sits on Apple's Board. So, it's already one cozy, comfy relationship.
The combination of Apple/Disney makes sense. First, it would create an instant competitor to the content streamers, particularly Netflix and Amazon. Second, there would be a solid link between Apple tech and Disney theme parks, and third, there would be instant global streaming for ESPN sports content (both live and recorded). Disney needs Apple's distribution - Apple needs Disney's content. Apple had been in talks with Time-Warner right before AT&T launched their $85 billion bid for TW. and backed out. But for Apple, a Disney merger would be far better.
Apple is waiting for the Trump administration to lower the corporate tax rates so as to be able to repatriate offshore cash which could be used to fund the Disney purchase. As it stands, Apple has approximately $225 billion in cash sitting in overseas accounts. Wall Street analysts say that an Apple/Disney combo would be accretive - increasing the earning per share of the combined entity by 15-20%.
CMG believes that mega-mergers in the media/tech space are going to be the norm for awhile. Tech needs content and the major studios need distribution. It's quite simple really.
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