If Apple wants to make its bespoke content streaming service an uncontested behemoth, it should buy ESPN outright, as per the musings of one highly regarded Wall Street analyst. Now this view is gaining increasing acceptance in the sports circles, making the gambit all the more compelling for Apple.
This proverbial ball started rolling in July when Disney’s CEO, Bob Iger, revealed that the company was searching for “strategic partners” to expand ESPN’s reach and content library. That revelation then prompted Wedbush’s Dan Ives to speculate as to the attractiveness of Apple acquiring ESPN.
Do note that Disney owns 80 percent of ESPN, with the residual 20 percent owned by Hearst Communications. The company has so far eschewed placing ESPN’s prime content on the ESPN+ streaming service due to the billions of dollars that the network continues to attract from traditional cable TV. However, cord-cutting is a reality, prompting Disney to explore a fully direct-to-consumer path for ESPN. According to Bloomberg Intelligence, such a pathway could feasibly materialize by 2025, with ESPN requiring at least 8.1 million subscribers by 2026 at $20 per month to offset the revenue loss from cord-cutting. What’s more, a direct-to-consumer ESPN content streaming service could even bring advertising revenue of between $6 and $7 per month from each subscriber.
In early August, reports emerged that Disney was in early talks with the four major professional sports leagues in the US to acquire an equity stake in ESPN. There is a palpable sense of urgency at Disney, given the fact that the company’s own content streaming service, Disney Plus, lost $512 million in the most recent quarter. The iconic company is also saddled with debt, amounting to $44.5 billion.
Dan Ives Steps Up to the Proverbial Podium
This brings us to the crux of the matter. In an investment note that has continued to garner quite a lot of attention, Wedbush’s Dan Ives wrote last week that Apple’s potential acquisition of ESPN was a “no-brainer,” giving the iPhone manufacturer a sure-shot way of gaining “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.”
According to the Wall Street analyst, the acquisition makes a “ton of strategic sense,” with the personal relationship between Bob Iger and Apple’s Tim Cook only increasing the probability of some sort of deal over the coming years.
Apple now has over 1 billion paid subscriptions, with Apple TV Plus retaining just a small sliver of this pie at 50 million paid subscribers (Wedbush estimates). The company has been aggressively adding sports-related content to its library, having secured exclusive streaming rights for Major League Soccer (MLS) for a 10-year period in June 2022. MLS season passes have witnessed a significant increase ever since Lionel Messi signed up with Inter Miami.
Of course, Apple’s acquisition of ESPN would be anything but a walk in the park. At around $50 billion, this would be the iPhone manufacturer’s largest-ever acquisition. For reference, Apple’s largest purchase to date is the $3 billion that it paid for Beats Electronics. Apple would also have to contend with a host of anti-competition hearings and lawsuits. For those interested in gaining a deeper insight into Ives’ views, head over to this podcast and start listening from the 35:30 mark.
Apple’s Potential Acquisition of ESPN is Gaining Advocates by the Day
Why Apple Should BUY ESPN | The Way We Watch College Football Could Be Changing as We Know It
Also, Andy provides a proper solution to all these games being on different streaming platforms@Andy_Staples explains here: pic.twitter.com/Qv8GkjMRLM
— On3 VIDEO (@On3Video) August 21, 2023
Andy Staples, a popular college football commentator, has now come up in support of Dan Ives’ views vis-à-vis Apple and ESPN. In support of his views, Staples cites the example of Fox when it was a mere toddler in the Cable TV sphere. In order to attract viewers, Fox gained the rights to live stream the NFL games.
Staples also believes that Apple is the only company that can unify the disparate landscape of college sports online viewership by integrating various streams within its Apple TV Plus service.
Apple has a market capitalization of $2.7 trillion and is sitting on a cash pile of around $200 billion. The iPhone manufacturer could theoretically buy ESPN with just a quarter of its cash pile!
Do you think Apple acquiring ESPN is a no-brainer? Let us know your thoughts in the comments section below.
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