Forget about all that talk of dividends, buybacks, and preferred shares – Apple should step up and buy Disney. It’s not a an original idea, but it’s a relevant topic with the Apple growth engine sputtering just a bit.
1. Content
The combination of Marvel Comics, Star Wars, classic Disney films, Pixar, Touchstone, ESPN, ABC and more make the House of Mouse a content factory which can’t be found anywhere else with the possible exception of Sony and Time Warner. Of the three, Disney has the properties with the most potential as the Avengers and Star Wars franchises look set to explode and ESPN is a ratings and advertising juggernaut.
2. Theme Parks spinoff
Though Apple is sitting on a pile of cash that exceeds the GDP of most countries, an acquisition of Disney would still be expensive (market cap + 20% premium = $116B). A spinoff of the Theme Parks segment would reward investors with an attractive dividend-payer to complement their tech/media holding.
3. Cord cutting/Apple TV
If any company could pull off the trick of taking cord-cutting mainstream if would be an Apple-Disney combination. Could you live with a TV that streamed ESPN, ABC, Netflix and any shows/movies you wanted through iTunes which would also allow you to cut out the obligatory Dish Network/Comcast/Time Warner/Verizon/DirecTV/Charter provider contract? Hmmm.
4. Disney Interactive
This is the wildcard in the mix. Currently it’s just a unit which distributes multi-platform video games and global interactive entertainment, but Disney Interactive has the potential to totally disrupt the gaming market with the arsenal of franchise characters it has at its disposal. By all accounts, the business could use a fresh infusion of creativity and talent. Surely Apple could pitch in here.
Will it happen? Probably not. Would Disney’s board even approve a buyout? Probably not. But with the Steve Jobs estate owning 8% of the company’s stock maybe the idea doesn’t get tossed off the board’s agenda entirely.
Via Bloomberg, Seeking Alpha, CNBC
Clark Schultz Blog 