Wedbush says it's 'when not if' Apple will buy ESPN
Analyst Dan Ives says that sports channel ESPN is the "perfect fit" for Apple TV+, and predicts Apple will acquire the station in the next six to nine months.
ESPN is currently owned by The Walt Disney Company, and there have been ceaselessly wild predictions that Apple should or must or will buy the whole Disney firm. Now Wedbush analyst Dan Ives is scaling down those expectations by focusing solely on ESPN, but at the same time is adamant that Apple will buy it.
"I believe it's a matter of when, not if ESPN and Apple get together," Ives said on CNBC's "Last Call" show.
"I think Apple is really the perfect fit. And I think this is something for Cupertino that they're looking to go after. Live sports content is the golden goose."
Rather than an acquisition, Apple has previously been rumored to become a strategic partner of ESPN.
Ive says that's possible, but is certain Apple will buy ESPN outright instead. His comments follow how Lionel Messi's joining Inter Miami CF has doubled subscriptions to Apple's MLS season pass.
He argues that Apple TV+ needs content and that sports will give it that, plus the costs of sports rights mean it will be the largest firms who get them.
"It's a new age," he continued. "And I think when you look at Apple, I mean, you're talking about coming here historically has never done acquisitions of this size, but you have 200 billion that they could ultimately go after and more."
"And I think it's just the start of Apple, Amazon, and others just going more and more after sports content," said Ives. "You look at ESPN, to me, it's just the perfect fit for Apple. either as a strategic partnership minimum, but we believe an acquisition could clearly happen here as we look into next six to nine months."
Buying ESPN is a "no brainer"
"ESPN as an acquisition or strategic partnership to Apple a no brainer," wrote Ives in a note to Wedbush investors seen by AppleInsider. "There is only one asset in our opinion that would accomplish this goal [of live sports on Apple TV+] and it potentially could be on the table depending on the Disney strategic overview and ultimately where [Disney CEO Bob] Iger and the Board land on this asset."
"We believe Apple would be much more interested in the ESPN asset than Disney overall as Cupertino is focused on a number of other key strategic initiatives with an acquisition of the Mouse not making a ton of sense in our view," he continued. "That said, acquiring ESPN ($50 billion+ price tag likely) would make a ton of strategic sense, gain 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.
ESPN is an American channel and Apple has shown that it tends to want global rights to any sport it covers. It is possible to watch ESPN overseas, but in each territory where it's available, it is bundled with other services and it's not clear how the potentially complex contracts would work if Apple wanted to bring the service under its own streaming network.
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1. I don't want the monthly cost of Apple TV+ to automatically increase by $10 or $15 for all subscribers regardless of whether they watch sports. ESPN's (and Disney's) profits over the years came from the fact that cable/satellite/streaming bundle subscribers pay for ESPN whether or not they watch it. I like the price of Apple TV+ where it is now (even accounting for the price hike in late 2022).
2. Post-acquisition, ESPN should be an optional monthly add-on to Apple TV+, but the price needs to be reasonable. I would be willing to pay, say, $9 or $10/month for ESPN during college football season. The problem with this idea is that other recent media reports speculated that Disney would need to charge consumers $15 to $20/month to make ESPN available on its own (or as a new part of the current ESPN+ streaming service) just to break even on exorbitant sports licensing costs. Presumably Apple would have to do the same.
An even better thought is for Apple to make certain broadcasts available to regular Apple TV+ subscribers without a price increase or add-on requirement. For example, it would be fantastic if I could watch College GameDay on Saturday mornings and the national Saturday night college football game on Apple TV+ as a regular part of my subscription. Such an offering might entice a portion of Apple's subscribers to buy an ESPN add-on that would pay extra for access to every live football broadcast on Saturdays, Sundays, and Mondays.
I'm a sports fan … but I no longer subscribe to any cable/satellite/streaming TV bundles because I don't want my money feeding into the unreasonable escalation of the cost of college and professional sports. Yes, it means I miss seeing a lot of games unless they're on over-the-air TV … but that was the only choice I could make. Unfortunately, it would probably take another 100 million people making the same choice to actually change things.
However, that said, I'm not sure why ESPN is a great fit for Apple when it has become a problem child for Disney. In the heyday of linear cable, ESPN was an incredible cash machine for Disney, but so much has changed with live sports licensing and, of course, the rise of streaming, none of which has been great for ESPN. I don't see how Apple ownership would change that equation. At best, I could see where "ESPN on Apple TV+" as a branding play would make live sports and Apple TV+ more synonymous in the minds of consumers, and maybe that's enough, but ESPN as a business still seems very troubled.
ESPN is a channel that doesn’t own any sports league or teams itself.
it likely has a small portfolio of broadcasting rights arrangements primarily cantered on the US.
In football there are developments where the sports teams themselves go into broadcasting with Real Madrid TV being a great example serving a global audience.There is an app for that and Apple can just sell a season pass and be the go to market aggregator.
No need to buy ESPN. Waste of cash
At the end of the day Dan doesn’t seem to know the difference between a rights holder and a limited licensee. He has done a flawed analysis and drawn bad conclusions.
If they were going to buy any part of Disney it would be the content rights that Disney wholly owns and is desired worldwide, their content library of animated & live action films along with rights to extend those franchise properties.
Had a little tech whoopsie this morning. Everything should be back to normal now 👍
But it appears to me that you think the NBA is an "American sport" (your words) but it includes one Canadian team. Baseball/MLB is similar to the NBA, which has one Canadian team (it used to be two!) However note that Apple's baseball rights include distribution to Canada (I'm not sure about worldwide.)
Apple's global interests force me to conclude that it would never invest in a US-only distribution deal, like ESPN, which does not even reach Canada let alone the world.
No, to date Beats is the largest Apple acquisition at a measly 3 billion dollars.
Analysts/Wall Street keep forgetting that Apple is very frugal, and very particular in the companies that they buy, Apple leaves the large overpaying senseless acquisitions to Microsoft, Google, Amazon, Elon/Tesla, and Facebook.
Apples best acquisition cost $400 million but it came with the best CEO in the last 25 years, and three other acquisitions, PA Semi, Intrinsity, and Anobit were critical to Apple’s, Arm SOC’s development, cost Apple a total of 1.1 billion dollars.
No……
Disney has destroyed Pixar, but it is still the only thing worth buying. Nothing else is close, Pixar before Disney, and after Disney the tale of two companies, a new home with Apple is its only chance at resuscitation. The rest of Disney, ABC, and ESPN is trash.
MLB is an exception, but those limited games are still avail in 60 countries with no local restrictions and for free with base Apple TV+. Not sure their goal except to maybe mine some data for future licensing deals. If Apple can show significant global watching then it could be an advantage to MLB or other sports to license to Apple so they can not only make license fees but also expand the brand globally. The leagues make ALOT of $$ on merch. ie. Messi cost a lot of $ but how many Jerseys did they sell and $ went to MLS & Inter-Miami for every one sold.
It would be more correct to say "NBA is a North American sport". Saying just "American" refers to the US. They are not "United Staters".
As for Apple buying ESPN... meh. I prefer when Apple can add some value to an industry, or solve a problem.