With sports activities now a “golden goose” begetting streaming progress for Apple, it might be a “no-brainer” for the tech large to companion with and even absolutely purchase ESPN.
That’s the newest take from Wedbush Securities analyst Daniel Ives, a longtime Apple bull, who laid out the case to purchasers in a analysis observe Wednesday.
Apple TV+ has about 50 million subscribers in the present day, Ives estimates. The tech firm has by no means divulged numbers for the almost 4-year-old service, whose outcomes are mirrored within the broader Companies line in its monetary statements. Within the quarter ending June 30, Apple topped 1 billion paid subscriptions to all companies, together with iCloud, Apple Music, Apple TV+ and others, with income within the section gaining 8% over the prior-year interval to achieve $21.2 billion.
After a sluggish begin in its first 12 months, Apple TV+ discovered its stride with the Emmy-winning Ted Lasso and Oscar-winning CODA after which started to complement its movie and TV programming with dwell sports activities. The corporate acquired Main League Baseball rights and fashioned a three way partnership with Main League Soccer, with the latest arrival of Argentina World Cup hero Lionel Messi at Inter Miami offering a subscriber draw. Although the tech large’s tentative deal for unique Pac-12 soccer rights fell via (on the heels of talks with the NFL for Sunday Ticket rights additionally fizzling), Ives believes the corporate is not going to be denied.
“The massive appetite for live sports content remains the laser focus for Cupertino now to boost its streaming future and further tap into its massive installed base of 2 billion iOS devices worldwide,” Ives wrote. “We believe the answer and the shoe that fits for Apple is the golden ESPN assets which potentially may be on the table in one form or another as [Disney CEO Bob] Iger and the Board strategically and carefully look at Disney’s core assets over the coming months.”
Iger stated final month the corporate is searching for a strategic companion to assist ESPN navigate the stand-alone streaming waters. On final week’s quarterly earnings name, the exec stated the objective is securing a strategic companion to assist with “distribution, technology, marketing, and content opportunities where we retain control of ESPN.” He famous that Disney has “received notable interest from many different entities” in latest weeks.
A bulked-up ESPN direct-to-consumer providing is predicted to launch within the subsequent couple of years at a time when linear TV subscriber ranges proceed falling and sports activities rights charges preserve escalating. A key resolution looms for ESPN with the NBA, with these rights because of expire in 2025. Hypothesis has centered on Apple, Google and Amazon as potential companions whose troves of money might assist Disney and ESPN handle to pay rights charges at a time of austerity for the corporate and the general media sector. The state of affairs of a full spin-off or sale of ESPN has been downplayed by Iger, who has expressed a desire for retaining the sports activities model within the company fold. On the identical time, he has stated linear TV networks together with ABC and FX “may not be core” to the corporate, main some observers to imagine that every one of ESPN is doubtlessly in play.
As hypothesis swirls round ESPN, an age-old rumor has additionally been resurrected: Apple shopping for the complete Walt Disney Co. Requested about it on the decision, Iger stated it’s “not something we obsess about,” particularly given the present regulatory setting.
Ives sees ESPN as “much more attractive to Apple than Disney overall.” He did observe that Apple has typically not been aggressive by way of M&A offers, at the least by way of high-valuation transactions. Its priciest deal thus far has been the $3 billion acquisition of Beats in 2014. Regardless of that observe file, Ives wrote, “The market is quickly changing and Apple recognizes that in this streaming arms race there is a ‘closing window’ for the stalwart to acquire content and cement its footing in the live sports content arena.”
A full acquisition would seemingly price Apple greater than $50 billion, Ives estimates, and the transaction would undoubtedly draw a substantial amount of regulatory scrutiny. The analyst famous the “hawkish” tone set lately by officers like Federal Commerce Fee chair Lina Khan.
Even so, Ives says an ESPN roll-up or main partnership “would make a ton of strategic sense” for Apple, serving to it “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.”
Whereas there are a whole lot of “moving parts in the Disney situation,” Ives acknowledged, there’s a “strong relationship” between Iger and Apple CEO Tim Prepare dinner. The Disney CEO appeared at Apple’s June developer convention to tout the media firm’s involvement in Apple’s new digital actuality headset initiative. Prepare dinner’s predecessor, Steve Jobs, was additionally an in depth affiliate of Iger’s. The Disney exec wrote in his 2019 memoir that if Jobs had remained alive into the trendy streaming period, “We would have combined our companies, or at least discussed the possibility very seriously.”