Analysts are raising questions about Disney Chief Executive Robert Iger's future merger and acquisition (M&A) plans. The recent revelation that former Disney executives Kevin Mayer and Tom Staggs, who are now co-CEOs of Blackstone-backed Candle Media, have been retained in a "consulting capacity" to decide the fate of ESPN has fueled speculation.
In an unexpected twist, there is a decades-old rumor resurfacing once again - the possibility of Apple Inc. acquiring Disney. Although this idea seems far-fetched in today's regulatory climate, where the Federal Trade Commission is cracking down on Big Tech acquisitions, some media analysts speculate that it could be feasible if Disney decides to sell off assets and Apple acquires its direct-to-consumer business, including the popular streaming service Disney+. There are even murmurings about Apple potentially purchasing ABC, which reportedly is up for sale. However, this potential collaboration between Apple and Disney would undoubtedly face numerous challenges along the way.
These rumors have persisted over the years, partly due to Apple co-founder Steve Jobs' admiration for the Disney brand and the growing overlap between the businesses of both companies. However, during a recent conference call with analysts, Iger chose not to disclose Disney's future structure or any potential asset sales. When specifically asked about the Apple rumor, Iger firmly declined to "speculate" on such a sale, citing the current regulatory climate and the Federal Trade Commission's history of challenging mergers involving major tech companies like Microsoft Corp. and Facebook parent Meta Platforms Inc.
Ever since Iger hinted at the potential sale of Disney's assets in an interview with CNBC last month, much speculation has revolved around the future of ESPN.
ESPN and ABC Among Potential Properties for Sale as Disney Seeks Strategic Partners
According to media watchers, ESPN and related properties could potentially account for at least one-third of Disney’s current market cap of about $150 billion. However, Disney CEO Bob Iger has denied any plans to sell ESPN, although he has acknowledged that the sports network is looking for strategic partnerships to generate revenue, potentially with major sports leagues such as the NFL, MLB, NBA, and NHL. Just recently, ESPN announced a partnership with Penn Entertainment Inc. to launch ESPN Bet, a digital sportsbook available in 16 states this fall.
Another property that may be up for grabs is ABC. However, considering ABC's rights to major sporting events like the NBA Finals and two Super Bowls in the next eight years, it remains uncertain who would acquire the network and how Disney would replace the significant sports revenue it generates.
In addition to ESPN and ABC, other Disney properties that could be on the market include cable channels Freeform and Disney Channel, according to a report by the Wall Street Journal. The question remains as to whether the proceeds from any potential asset sale would be used to strengthen Disney's balance sheet or bolster its remaining operations.
Rick Munarriz, senior media analyst at The Motley Fool, wonders how Disney will navigate its current situation amid a $5.5 billion cost-cutting campaign. With declining sales and profits at ESPN and other cable networks, Disney is exploring various avenues to boost revenue as traditional TV ads decline, Disney+ subscriptions decrease, and attendance at Walt Disney World wanes.
To tackle these challenges, Disney has called on Kevin Mayer, a former executive who previously led Disney's strategic planning group for many years. Mayer orchestrated several transformative deals during his tenure, including the acquisitions of Pixar Animation Studios, Marvel Entertainment, Lucasfilm, and 20th Century Fox's entertainment assets. However, these acquisitions have received mixed reviews.
Amidst the uncertainty, Disney shares are currently trading at half of their previous highs. As Disney looks towards the future, the company hopes to find innovative solutions to revitalize its business and regain its market strength.