Apple and Disney: The Pros and Cons

Over the past week, amidst the chaos of world politics, there was a possible business deal being made on the side. The Apple Corporation is in serious talks to purchase The Walt Disney Company, according to Todd Spangler, a Digital Editor for Variety on April 13th. The acquisition of The Disney Company by Apple boasts benefits, including having a competition with streaming giant, Netflix, an integration of Apple technologies into the Disney theme parks worldwide; and, acquiring global streaming sports rights of ESPN and BAMTech (Spangler 2017). This information was gathered by two RBC analysts, Steven Cahall and and Leo Kulp, who stated that Apple is more focused on content and that Disney offers diversification without harming the hardware side that Apple is known for (Spangler 2017). The deal is in talks due to recent bids and acquisitions that did not work out as planned:

“Apple execs met with Time Warner honchos in late 2015 in a discussion that raised the possibility of a merger — before AT&T moved on its $85 billion bid for Time Warner… The Apple-Disney M&A chatter comes as analysts in the last few months have debated the possibility that Disney would make a move to buy Netflix — a highly leveraged transaction that some view as needlessly risky” (Spangler 2017).

Here come the cons to this deal. If Apple decides to acquire Disney, the deal would be worth $237 billion, if Apple shareholders are too wearisome though, Disney could spin off ESPN and theme parks to make the deal sweeter for Apple. Spangler also noted:

“Apple would need U.S. regulators to give it a “tax holiday” to repatriate offshore cash to fund an acquisition of Disney. Assuming Apple could obtain a 9% tax rate, it would effectively have access to cash of $223 billion, RBC noted: ‘Even though investors might expect higher cash returns in form of buybacks/dividends, strategic uses are likely to take precedence’” (Spangler 2017).

To give this even more credibility, according to Business Insider’s Rob Price, Apple (theoretically) has the money for the deal, “[Apple] has about $230 billion stashed overseas and is waiting to repatriate it back to the US” (Price 2017). While the taxes could be high, Apple CEO Tim Cook remains optimistic.

While this deal is speculative, it makes logical sense for the deal to come to light. The reason is due to the history the two companies share. Steve Jobs invested money into Pixar in the early 1990s, and the two giants have always been close and collaborative in terms of business.  We shall have to wait and see if this shows any merit; at least the stocks for both companies are doing well at least.


Work Cited

Price, Rob. “Analysts are speculating about Apple buying Disney: ‘A tech/media juggernaut like no other'” Business Insider. Business Insider, 13 Apr. 2017. Web. 15 Apr. 2017.

Spangler, Todd. “Could Apple Buy Disney? Wall Street Revives Rumor of Mega-Deal.” Variety. N.p., 13 Apr. 2017. Web. 15 Apr. 2017.