Forget a Strategic Partnership — Apple May Just Buy ESPN Outright

It appears that Disney is at a bit of a crossroads when it comes to figuring out what to do with its sports broadcasting arm, ESPN. Over the past few months, it’s been shopping around for a strategic partner, with hints appearing last month that Apple could be in the running.

While this is largely speculation at this point, Disney and Apple have always enjoyed a cozy relationship, so it makes sense that it would be a frontrunner after the entertainment behemoth chose to abandon the idea of partnering with a major sports league and seek out a deal with a technology company instead.

The theory is that a tech platform could help with distribution, streaming, and content as it prepares to move its sports network into the direct-to-consumer streaming business over the next two years and navigates the complicated minefield of doing so without alienating its cable television partners and audience.

While it’s easy to see how a partnership like this may appeal to Apple by giving it a leg up as it struggles to build out its own sports streaming offerings, some are questioning whether Apple wants to take a minority position. Friendly or not, Apple would end up riding in the back while Disney remains solidly in the driver’s seat.

However, Daniel Ives, managing director of Wedbush Securities, is making another one of his “when not if” predictions, suggesting that rather than going for a partnership with ESPN, Apple will just buy the whole kit and caboodle instead.

Such a move would certainly give Apple the control it wants and in an interview on CNBC’s Last Call, he described such an arrangement as a “no-brainer” and a “perfect match.”

I really think it’s a matter of when, not if, because if you look at it for Apple, they need content, and live sports content is what they’re going after.Daniel Ives

In a research note to investors titled Finding Messi Success and Massive Appetite for Sports Content, Ives how live sports has become a “golden goose” for streaming services and highlights Apple’s clear ambitions to drive even harder into this arena as it signs landmark deals such as the one with Argentina’s World Cup star Lionel Messi.

Sports: The Final Frontier

It’s hard to argue that Apple TV+ has had massive success on some fronts. In the four years since it launched, Apple has already conquered some of the biggest areas in entertainment. Nominations for awards began coming in before its debut shows had even finished airing their first seasons, after which it became the first streaming service to win a Primetime Emmy in its first year of operation, and by the following year, had made history again with record nominations and four wins for Ted Lasso. It’s also signed significant deals with major Hollywood players, and launched high-profile movies with viewership to rival that of big box office hits.

This all culminated in early 2022 when Apple’s CODA became the first streaming service film in history to win the Oscar for Best Picture, beating out Netflix, which has failed to take the top prize despite having eight of its films nominated from 2018 to 2022.

Despite these landmark successes, live sports streaming seems to be the one nut that’s been tougher for Apple to crack. The company courted the NFL for years without gaining any traction, despite Apple’s CEO Tim Cook and NFL Commissioner Roger Goodell being on very friendly terms. Rumors persist that it’s working on college football deals, and while a Pac-12 arrangement may be waiting in the wings, that could end up being small potatoes as colleges leave the conference for greener pastures.

The most significant sports package Apple has landed so far is its 10-year exclusive Major League Soccer deal, along with a smaller Friday Night Baseball deal with MLB. By all reports, Apple’s MLS Season Pass has been going reasonably well, and the recent addition of Lionel Messi has significantly sweetened the pot, driving new viewership records for the service.

However, that’s just the tip of the iceberg for Apple’s sports ambitions, and it clearly wants to make the same kind of mark in live sports content as it has in Hollywood. Ives believes Messi has just whet Apple’s appetite for more, and ESPN may be the key to getting it.

The massive appetite for live sports content remains the laser focus for Cupertino now to boost its streaming future and further tap into its massive installed base of 2 billion iOS devices worldwide. We believe the answer and the shoe that fits for Apple is the golden ESPN assets which potentially may be on the table in one form or another as Disney CEO Bob Iger and the Board strategically and carefully look at Disney’s core assets over the coming months.Daniel Ives

While some have speculated that Apple might buy Disney outright — a chestnut that’s so old that it’s been making the rounds since Steve Jobs was at the helm — Ives makes the case that ESPN is “much more attractive to Apple than Disney overall.” While a Disney acquisition would be possible for Apple, it’s not the Cupertino company’s style to go after such big fish. Its 2014 acquisition of Beats for $3 billion is still the biggest deal it’s ever made, and that was done primarily to get Apple Music off the ground.

Buying Disney wouldn’t make much sense when Apple already has its own entertainment brand, but ESPN could be to “Apple Sports” what Beats was to Apple Music.

[The information provided in this article has NOT been confirmed by Apple and may be speculation. Provided details may not be factual. Take all rumors, tech or otherwise, with a grain of salt.]