Is Apple Looking to Buy Disney?

louismg writes "This week, Barron's is suggesting that with Steve Jobs on board as the number one shareholder of Disney, following Pixar's acquisition, that Disney is ripe for the plucking for an acquisition by Apple. But look at the numbers. Apple has a $60 billion market cap, and Disney's is over $50 billion. Apple's cash on hand is in the $10 billion range. Wouldn't a Disney acquisition eliminate the possibility of working with NBC's shows on iTunes, or working with Viacom/MTV? It would seem the conflicts and competition would outweigh a purchase of Disney - Pixar or not."

Antitrust

[DoofusOfDeath]

Apple runs iTunes. Disney produces some content. Serious risk of antitrust action.

"News for Nerds?"

[d.corri]

More like "Speculation for Nerds."

But why would they?

[cowscows]

I don't see what Apple really has to gain from buying Disney that Jobs probably can't negotiate out of Disney already. Rights to put Disney content and pixar content on iTMS? I'm willing to bet that was already talked over heavily during the pixar deal. Does any one think that Apple wants to worry about running theme parks? Even if they could manage to afford it, it doesn't seem like Apple has much to gain by buying them.

Re:Mating of dinosaurs

[Shivetya]

Disney without Pixar is still an incredibly viable company. Pixar made a few good films under Disney but that is all. Disney is a conglomerate that wisely does not rely on one thing to keep it viable. They produce many films under various film companies and while not all are as widely successful as some of their Pixar created works they do very well. Look towards Hollywood and compare the numbers. The sheer number of films being produced shows that it is very few that ever make it well in the theaters.

Sure Disney would have been better off with Pixar still making films for them. Yet Disney can survive failing films better than Pixar could.

As for your Apple comment. Apple still has a very loyal and devoted following for their computer and software products. While not on the scale of Microsoft they are still holding their own and in some cases staging a come-back. The iPod was a stroke of luck. It was the right product at the right time. Apple for all its creativity could leverage that further by opening up the iPod to play DRM'd music provided by other sources but hasn't had to so because they still have a majority of the US market. They might in the future move that way, most likely overseas at first but for now they have no need. As with Disney Apple diversified. They were simply existing with their sales of Macs and related software. With more than one viable revenue stream they are growing. This allows them to take more risks and further expand their original business.

Neither company needs the other.

Re:Mating of dinosaurs

[cowscows]

Agreed, specifically in regards to Apple. The iPod has been a huge success for them, no doubt, and I'm sure they're glad to have that money. But even before the iPod came about, Apple had done a pretty good job of turning around their computer business. They were making profit, OSX was up and coming, and the iMacs, iBooks, and Powerbooks were all well received. Sure, they weren't outselling Dell, but a lot of people forget that you don't have to completely dominate a market to have a successful business.

Because AOL/TimeWarner/WFTBBQ worked so well

[Matey-O]

Remember the last round of huge company consolidation? The TW/AOL group and msnbc folks kinda wish they could forget. Apple is a GREAT hw/sw company, Steve might -own- hw/sw and the media it runs on, but it'd be best to keep them seperate entities in his checkbook ledger.

No chance of Apple buying Disney.....

[postbigbang]

It fits none of Apple's agendas to do so, in fact it would create numerous difficulties for both companies. Instead, it would be better to break up Disney into new pieces that reflect operating income better, just like Icahn was trying to do to Time Warner AOL.

Barrons had too many martinis before they wrote that one.

Re:Antitrust

[bshensky]

Oh, c'mon. Comcast buys and decimates TechTV into G4? They own OLN. They own E! Entertainment Television. Style. The Golf Channel. Comcast SportsNet.

Anyone have a problem with Sirius and XM providing "exclusive" content and channels? Didn't think so.

The Bush Admin allows this to happen. The FCC is happy to take long martini lunches while the content deliverers become content providers.

Let's face it. Deregulation amounts to a blank check for media delivery and media creators to fsck 'til the cows come home.

Flame on, dudes...

The rest of the copyright industry

[tepples]

Apple video ipod needs content. Disney has lots of it.

NBC/Universal, Viacom, CBS (recently divorced from Viacom), Sony (which still owns Sony BMG Records), Fox, and Warner have more. If Apple buys Disney and ABC, it could discourage the rest of the TV and movie industry from offering their works on iTMS.

Nothing to do with Apple

[billcopc]

Let's backpedal a bit: What thy hell would Apple do with Disney ? Companies don't just buy each other out with their spare change unless it presents a strategic or financial advantage. Now I'm no market analyst, but I would tend to think if Apple, who is still an underdog in the computer world, wanted to strengthen its foothold in the world of capitalism, they would be looking at acquiring technology or IP from smaller companies, playing corporate PacMan. They're not be big enough to play dirty like Oracle and Microsoft just yet, so they have to think constructively.

Buying Disney would show diversity, which can also be interpreted as Apple losing focus and looking for a backup plan or exit strategy from the computer business. A company with cold feet does not fare well on wall street. Disney is not exactly in a position of great power either, it is past its prime. I think at this point Apple should focus on improving performance within its core operations, be it cost-cutting by acquiring certain part suppliers, or perhaps stepping up the marketing machine and pursuing untapped markets to significantly increase the sales volume. Anything that will give the company lasting power so that in a year or two, they will have grown and have the clout to perform more daring acquisitions. Right now a miscalculated buyout could leave Apple unprepared for things to come, sending them back into the dark ages.

Re:Antitrust

[ucblockhead]

How is that different from Sony, which produces content and has an online store?

Learn from Sony's mistake

[Anonymous Coward]

Besides, many regard Sony's entry into the Content business as a disaster. A company once respected for stylish and high quality electronics, making tape decks and VCRs, goes out and acquires a division that produces content. Now the content division blames the electronics division for contributing to piracy, leading to all sorts of internal politics, bickering, and inefficiency. Sony misses the boat on hard drive based mp3 players, leaving an opening for Apple to slide in to conquer the market. Basically, the interests of producers of hardware and content are at odds. It would be a bad move for Apple.

Re:But why would they?

[cowscows]

Yeah, and look how well it's worked out for Sony in the long run. You've got conflict between the content producing side and the electronics side that has pretty much handicapped both in terms of new innovations, and that's a big part of what allowed Apple to have so much success as of late. And now Sony's big cash cow is their video games division, which is propping up their ailing consumer electronics and media divisions.

Re:Antitrust

[superflyguy]

A trust would be when one group has control of an industry. Antitrust laws are supposed to make sure trusts don't abuse their control. They prevent abuse of horizontal integration. Vertical integration does not create a trust, so any law aimed at controling companies that own all the resorces necessary for producing and distributing their products could not correctly be termed "Antitrust". (I am a Nomenclature-Nazi.)

And it would be hard to limit vertical integration, because where do you draw the line? Apple already designs, builds, and distributes it's own computers. If that's legal, why shouldn't scripting, filming, editing, and distributing films be legal? What about selling online? What about when stores have their own trucks to transport goods... shouldn't they have to pay someone else? And I guess oil companies with rigs and ships and refineries and trucks and stations should also be illegal...

There is no good way to regulate that. And no good reason to, because they can't use the lack of competition to raise prices or lower product quality. But sooner or later if they get too big they'll have to worry about antitrust laws.