Wall Street analyst says Apple could buy ESPN

Now and then a Wall Street analyst will open his mouth to recommend that Apple buy Disney. As recently as this past March, Needham's Laura Martin fanned the flames by suggesting that Apple and Disney "are worth more together than separately." Current Disney CEO Bob Iger wrote in his autobiography, published in 2019, that had Steve Jobs not died in 2011, merger talks between the two companies would have been held.

The rumor of an Apple-Disney combination usually comes through this writer's inbox at least once a year and has been known to surface as many as two times in a single year. That's because while Apple is a tech company at heart, it also has a big stake in the entertainment business with Apple TV+ and Apple Music. Disney has occasionally strayed into the tech game and was even known to be working on OTA wireless charging solutions a few years ago. The company also licenses its iconic cartoon characters to manufacturers of phones and phone cases. Disney also develops video games using its popular characters.

And of course, there is always the Steve Jobs connection to Disney thanks to Pixar. Jobs was co-founder and also was the CEO of the computer animation house when it released its first big hit, "Toy Story." And Jobs' was at the helm of Pixar when it was purchased by Disney in 2006 for $7.4 billion. The all-stock deal left Jobs and subsequently his estate as the largest individual stockholder in the House of Mouse for several years.

Today, per Seeking Alpha, Wedbush analyst Dan Ives has been telling Wedbush clients that Apple could be interested in parts of Disney's television business that the Burbank-based company might be looking to sell. These businesses, in the words of Disney CEO  Bob Iger, "may not be core to Disney." The company could sell "worldwide sports leader" ESPN and is also believed to be "considering potential strategic partnerships."

And we've seen Apple TV+ look to add more live sports content. This year it added Friday Night Baseball to the schedule, and its 10-year exclusive deal to stream Major League Soccer paid off big time when global superstar Lionel Messi signed with MLS squad Inter Miami through 2025.

In a note to clients, Ives wrote, "[T]he 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. 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 Iger and the Board strategically and carefully look at Disney's core assets over the coming months."

What the analyst is saying is that ESPN "is much more attractive" to Apple than Disney as a whole because it would give Apple access to valuable sports content and help it boost its live streaming of major sporting events while cross-promoting Apple TV+.

Ives says that buying ESPN could cost Apple $50 billion; large transactions have never been Apple's style as the largest deal it ever made was the one it announced in 2014 to buy Beats Audio for $3 billion; that acquisition turned into Apple Music. Still, after unsuccessfully bidding for NFL content, Ives believes that Apple CEO Tim Cook understands that there is a "closing window" for Apple to acquire sports content for Apple TV+.

Apple could end up in a bidding war over ESPN as Ives mentioned other possible suitors including Amazon, Google, or Verizon. There is also the possibility that the major sports leagues such as MLB, NFL, and the NBA could become strategic partners with ESPN.

No matter how you slice it, if Disney does decide to put ESPN up for sale, Apple is going to be interested. But will it be interested enough to make a culture-changing acquisition that could take Apple into the high tiers of M&A (mergers & acquisitions) which is something that the tech giant purposely stayed away from in the past?