I am a big fan of Disney, whether it be its theme parks, movies, or TV shows. My fondest memories were taking my son Ben to DisneyWorld when he was about 1 and a half years old and my granddaughters to Disneyland when they were young, too.
But over the last ten years, I have been concerned about Disney’s decision to expand its investments to other lines of businesses that I did not see as core to the company’s mission and strengths.
In the late 2000s, I was privileged to write about Silicon Valley and technology for ABC News. I grew fond of its reporting and great integrity in hard news and analysis, and I still see it as an essential news organization today.
However, when Disney decided to buy ABC News, I did not understand why this focused entertainment company wanted to own a news organization. Yes, ABC did produce TV shows and entertainment programs. Still, that always was a side business to its fundamental purpose to exist, which is to report the news and provide intelligent analysis.
I had similar misgivings when Disney bought ESPN. I did not see it as a core business for them and went on the record that adding ESPN may not be a wise decision because it made Disney stray from its core competencies.
Now that Bob Iger has returned to Disney as its CEO, he realizes that they may have spread themselves too thin and is rethinking who Disney is and what it needs to focus on in the future.
A recent column in Puck suggests that Iger and Disney’s execs are seriously looking a selling off some assets-
“But what’s becoming increasingly true in the second Iger tenure is that success is less about transforming Disney into a modern streaming competitor than skillfully and quickly reducing the company to its core businesses. And as Iger signaled in Sun Valley, he doesn’t seem to love the burden he’s undertaken but instead still loves the company that he’s undertaken it for. Nevertheless, he appears clear-eyed about the opportunity and the reality. ESPN is, by far, his most valuable linear asset. And if Apple doesn’t want it, he’ll find that other strategic partner—and fast.”
Puck’s analysis mirrors the scuttlebutt around Silicon Valley about the possibility of Apple buying a Disney asset if it becomes available, with a specific eye on ESPN.
As Puck points out, ESPN is a valuable asset, but Iger most likely understands ESPN may not be needed under Disney in the future.
On the other hand, Apple has made serious investments in sports content with partnerships with MLB, NBA and Major League Soccer. Indeed, the NBA is working closely with Apple to create a specialized basketball-focused game and dedicated content for Apple’s Vision Pro spatial computing headset.
Sports content is already an essential part of Apple TV+, and Apple has signaled that Apple TV+ will expand its sports programming in the future. It would also give Apple access to the NFL, which is locked up by ABC, CBS, FOX, NBC and ESPN today.
I am still trying to understand how serious Apple could be about buying ESPN from Disney. However, I wonder if Apple needs to own this sports channel outright or do more content licensing deals directly with the major sports groups.
Buying ESPN has advantages as its brand is worldwide, and Apple has the cash to expand its reach to other major sports markets in Europe, Asia and South America. On the other hand, it would also force them to add multiple levels of management and the headaches that would come from that.
From my viewpoint, doing aggressive deals with the top professional sports bodies to carry major league sports programs and teams in regions outside the U.S. makes more sense and is easier to manage.
Another suggestion that has been bandied about is Apple buying Disney outright. Given Apple’s core business goals and objectives, this idea is dead-on-arrival.
Apple is a computer company that continues to make superb hardware products. However, Tim Cook has brilliantly created something that all PC companies have tried to do. Since it was founded, Apple has found a way to create re-occurring revenue tied to its hardware.
Apple’s various services, as well as Apple TV+, games and apps, are now a significant part of Apple’s profitability. Indeed, Apple is the envy of all PC companies who have yet to find a way to create re-occurring revenue outside of making major investments in servers and professional services.
Apple has proven that owning things like ESPN or Disney is not in its best interests. One could argue that ESPN and its subscription-based sports channel could make sense, although licensing sports content aligns more with Apple’s ultimate business objectives.
It is clear that Disney’s CEO, Bob Iger, wants to focus more on its core business. Selling off assets like ESPN and others that do not allow him to do this is now in play.
However, I would be stunned if Apple does buy ESPN. Apple is probably grappling with the buy vs. license issue on this and other potential companies for sale. Historically, except for Beat’s $3 billion purchase, Apple mostly buys small companies and associated technology that could enhance and impact Apple hardware, apps and services.
Buying ESPN would be quite a stretch, and I just don’t think Apple would want the headaches of owning this great sports company.