Wedbush Securities analyst Dan Ives raised eyebrows this week by\u00a0declaring\u00a0it a \u201cno-brainer\u201d for Apple to acquire ESPN from The Walt Disney Co. at a potential price of $50 billion.<\/p>\n
The tech giant made its biggest move into live sports so far with a 10-year, $2.5 billion streaming deal with Major League Soccer a year ago, and Lionel Messi makes it look like a smarter decision with every highlight-reel goal on Apple TV+.<\/p>\n
\n
Apple and ESPN are \u201cthe perfect fit,\u201d\u00a0Ives told CNBC. \u201cCupertino is looking to go after live sports content as the golden goose. I believe it\u2019s a matter of when \u2014 not if \u2014 ESPN and Apple get together.\u201d<\/p>\n
Apple would get rights to the NFL, NBA, WNBA, MLB, NHL, UFC, the PGA Tour, tennis Grand Slams, Formula 1, and college football\u2019s Big 12 and SEC Conferences \u2014 plus ESPN\u2019s first two Super Bowls after the 2026 and 2030 seasons.<\/p>\n
During ESPN\u2019s 44-year history, corporate ownership has flipped several times between Getty Oil, Texaco, ABC, Capital Cities Communications, RJR Nabisco and The Walt Disney Co. (Disney currently owns 80%, while Hearst owns 20%).<\/p>\n
James Andrew Miller, author of \u201cThose Guys Have All The Fun: Inside the World of ESPN,\u201d noted Apple would not even have to buy 100% of ESPN for it to be a \u201cgame-changer.\u201d<\/p>\n
With a market capitalization of $2.7 trillion, Apple could make ESPN the favorite for every sports property that comes up for bid, including the NBA and the College Football Playoff.<\/p>\n
\u201cApple has enough change in their couch cushions to fundamentally alter the media rights landscape,\u201d Miller told Front Office Sports.<\/p>\n
Not so fast<\/h2>\n
The union of Apple\u2019s 2 billion worldwide active devices with ESPN\u2019s audience of 105 million monthly unique digital visitors and 25 million ESPN+ subscribers would no doubt be a powerful business combination.<\/p>\n
Amazon Prime Video can testify to the drawing power of live sports. Prime\u2019s debut stream of \u201cThursday Night Football\u201d last season generated a\u00a0record number of sign-ups\u00a0over a three-hour period. Amazon has a growing relationship with the WNBA, already has its hooks into the NBA via a streaming deal in Brazil, and also plans to launch a\u00a0standalone sports app.<\/p>\n
But Apple is choosy when it comes to acquisitions.<\/p>\n
It\u2019s been nearly a decade since its biggest deal: the $3 billion purchase of Beats in 2014. Apple has the capital reserves of a small country, but it\u2019s still a big leap to the upwards of $50 billion for ESPN.<\/p>\n
Then there\u2019s ESPN\u2019s long-running role as Disney\u2019s cash cow: Over the decades, Disney chief executive officer Bob Iger has used the billions generated by ESPN affiliates and advertising fees to finance his acquisitions of Marvel, Pixar, and Lucasfilm.<\/p>\n
The sports-loving Iger has long resisted calls from activist investors like Daniel Loeb to spin off ESPN. He recently named the Jimmy Pitaro-led ESPN one of three corporate \u201cpillars\u201d of Disney, along with theme parks and entertainment.<\/p>\n
Even with ESPN\u2019s economic model under pressure from cord-cutting, it\u2019s uncertain whether Iger would want to turn off that revenue spigot. Since ESPN will air its Super Bowls and the NBA Finals on ABC, its sister broadcast network would likely have to be included in a deal.<\/p>\n
Finally, there\u2019s the mystery of what Apple truly wants out of sports.<\/p>\n
Media observers who believe that Apple wants to \u201crecreate\u201d ESPN could be way off base, according to Patrick Crakes, a former Fox Sports executive turned media consultant.<\/p>\n
Apple could have landed the rights to the struggling Pac-12 conference for a song. Instead, they walked away, he noted. The NFL\u2019s \u201cSunday Ticket\u201d rights were ultimately landed up by Google\u2019s YouTube TV, and Apple\u2019s MLB streaming deal is just for Friday night games.<\/p>\n
\u201cApple is a device manufacturing company. The media picture has to fit into that; not vice versa. So they\u2019re being cautious,\u201d Crakes said.<\/p>\n
Under pressure<\/h2>\n
The idea of giant streamers quickly boosting their live sports rights by acquiring legacy competitors is gaining \u201csaliency\u201d among investment strategists, according to Crakes, but he doesn\u2019t think we\u2019re quite there yet.<\/p>\n
\u201cYou\u2019d get a lot of assets that you probably don\u2019t need. But it\u2019s a good problem to have because [these companies] are still profitable,\u201d said Crakes. \u201cIf you\u2019re Apple or Amazon, and you really believe that media is accretive to your long-term value or supports some core element of your long-term value, then you do it.\u201d<\/p>\n
But some streamers are finding out the hard way that sports content isn\u2019t the attraction they thought it was. Despite the success of Netflix\u2019s \u201cFormula 1: Drive to Survive,\u201d other sports documentaries have flopped.<\/p>\n
\u201cStreamers should invest in actual, live sporting events, not unscripted, sports-adjacent programming,\u201d wrote The Ankler.<\/p>\n
Changing TV habits and a stuttering economy are putting pressure on Disney and its crown jewel.<\/p>\n
With cord-cutting slashing ESPN\u2019s footprint to 73 million homes from a high of 100 million, Iger\u2019s open to selling an equity stake in ESPN to a \u201cstrategic partner,\u201d as well as offloading the rest of Disney\u2019s linear networks, including ABC. Verizon has thrown its hat into the ring as a potential partner, according to The Information.<\/p>\n
Iger recently brought back two top former executives, Kevin Mayer and Tom Staggs, to help evaluate potential investors, which could include rights partners like the NFL, NBA, and MLB.<\/p>\n
Disney also overcame its decade-long aversion to sports betting by striking a 10-year, $2 billion deal with Penn Entertainment to rename Barstool Sportsbook as \u201cESPN Bet.\u201d<\/p>\n
Apple wouldn\u2019t be the first outsider to see sports media as a ripe plum to be picked.<\/p>\n
DraftKings explored an acquisition of Bleacher Report from Turner Sports in 2019. It didn\u2019t happen. But who knows if Warner Bros. Discovery Sports would welcome a similar overture today. As cost-cutting boss David Zaslav warned: \u201cWe don\u2019t have to have the NBA.\u201d<\/p>\n
Similarly, Disney investors might welcome an Apple overture to the Happiest Place on Earth, but one sports media expert believes that\u2019s more of a \u201clong-term\u201d play.<\/p>\n
\u201cI think the Apples and Amazons are going to try to build momentum by getting their own properties, their own rights, then eventually look to acquire the linear networks to match.\u201d<\/p>\n
Kicking the door down<\/h2>\n
In 1993, Fox was dying to break into sports TV, but the brash network behind shows like \u201cMarried with Children\u201d and \u201cWhen Animals Attack\u201d still wasn\u2019t taken completely seriously.<\/p>\n
So Australian billionaire Rupert Murdoch got creative. He swooped in and stole the NFL\u2019s NFC TV package from incumbent CBS Sports with an audacious $1.6 billion, four-year bid.<\/p>\n
Did Fox overpay? Yes. But Murdoch knew he either had to go big or go home \u2014 and his decision changed the sports TV landscape forever.<\/p>\n
Fast-forward 30 years, and most national sports rights are tied up for the next decade by linear networks. The NFL\u2019s rights are confirmed through 2033. The NBA\u2019s about to tip off billion-dollar negotiations that could take its rights off the table until the 2030s and beyond. MLB and the NHL\u2019s rights are spoken for until 2028.<\/p>\n
Like Fox back in the day, leagues and teams use streamers as pawns to squeeze more money out of networks \u2014 and like Fox, it may be time for streamers to get aggressive if they\u2019re serious about dominating live sports rights.<\/p>\n
Rather than waiting years for the chance to bid on rights, streamers could just buy the legacy media companies that control them, and inherit their rights.<\/p>\n
\u201cThat is really the only way new entrants have gotten into the sports business for the last 40 years or so,\u201d warned one veteran sports TV executive. \u201cYou have to kick the door down.\u201d<\/p>\n
Read the original article on\u00a0FrontOfficeSports.com.<\/p>\n
For more on how sports impacts business and culture, subscribe to the\u00a0Front Office Sports Today podcast.<\/em><\/p>\n<\/p><\/div>\nRead the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"Wedbush Securities analyst Dan Ives raised eyebrows this week by\u00a0declaring\u00a0it a \u201cno-brainer\u201d for Apple to acquire ESPN from The Walt Disney Co. at a potential price of $50 billion. The tech giant made its biggest move into live sports so far with a 10-year, $2.5 billion streaming deal with Major League Soccer a year ago, […]<\/p>\n","protected":false},"author":1,"featured_media":9027,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"video","meta":{"footnotes":""},"categories":[239],"tags":[83],"class_list":["post-56263","post","type-post","status-publish","format-video","has-post-thumbnail","hentry","category-investing","tag-featured","post_format-post-format-video"],"yoast_head":"\n
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