Why everyone's wondering if Apple will buy Disney

It's not the first time that we've seen speculation that Apple could buy Disney, but what might seem a farfetched idea has just resurfaced with a vengeance. And it's starting to sound not quite so preposterous after the reveal of the Apple Vision Pro headset.

The Cupertino tech giant is already the world's most valuable company in terms of stock market value. Its combination with Disney, also based in California, would create an absolute giant with a unique reach across tech and entertainment (see the best Apple deals).

Could Apple buy Disney?

There's been speculation about an Apple-Disney deal ever since Disney bought Pixar in 2006. The late Apple co-founder and CEO Steve Jobs was Pixar's chairman and majority shareholder, and he became a member of Disney's board as a result of the deal. The idea of a merger has been rekindled since Bob Iger, a friend of Jobs, returned as Disney's CEO in November. 

Iger's known as a dealmaker, having also bought Marvel and Lucasfilm during his initial spell at the helm of Disney. Some expect him to want to seal his legacy with a sale, and he's dreamed of a deal with Apple in the past. In his 2019 autobiography, The Ride of a Lifetime, he even wrote:" I believe that if Steve were still alive, we would have combined our companies, or at least discussed the possibility very seriously.”

As for whether Apple could be interested, the company hasn't ruled out big purchases. And while it once tended to 'stay in its lane', avoiding overexpanding to become an everything company, that's changed a little with its launch of its own Apple Originals for Apple TV+.

On a call with investors in April last year, CEO Tim Cook said: “We’re always looking to buy companies, we acquire a lot of smaller companies and we’ll continue to do that to add more talent to the IP. We don’t discount anything big if the opportunity presents itself.” The factors he'd look for in a big acquisition would be "strong intellectual property and big names.”

Would a deal benefit Apple? Needham analyst Laura Martin estimates that Apple could be worth 15% to 25% more if it combined with Disney, arguing that their content and distribution footprints are highly complementary. 

Apple TV+ could add Disney's estimated 235 million streaming subscribers from Disney+, ESPN+ and Hulu to its rumoured 25 million. Meanwhile, Apple Music would get more songs, Apple News+ could be integrated into ABC News and Apple Arcade could get Disney, Marvel and Star Wars games. At the same time, content production, infrastructure and marketing costs could be streamlined.

“We argue that the best way to think about AAPL’s valuation, pricing power, competitive advantage period and barriers to entry is through the lens of 1.25B of the wealthiest consumers in the world, using 2B active AAPL devices an average of 4 hours per day,” Martin wrote.

Why now?

Speculation is hotting up again because of the big reveal of the Apple Vision Pro AR headset at WWDC 2023 this week. Disney was given its own slot in the launch presentation for the headset, revealing how its content will look in Apple's vision for spatial computing. If Apple owned Disney it could force it to make the content it wanted for the headset.

Martin told CNBC "You can't actually force the Walt Disney Company, unless you own it, to make content specifically for the Vision Pro headset or for Apple. And if the creative content guys at Star Wars or at Pixar or at Marvel don't want to do it, they don't have to do it.

She added: "If Apple owned [Disney], it could say, 'Look, we want exclusive content for the 100,000 units of $3,500,' and it could actually drive penetration of that $3,500, headset by having exclusive Disney content because they're the best storytellers on Earth."

Even if the companies wanted to do a deal, there could be some hurdles, however. Disney's price for one. It's valued at $180 billion. That might seem small for a company with a valuation of 2.80 trillion, but it's hardly peanuts. According to the Motley Fool, Apple would need to take on debt and suspend its share buybacks to make the acquisition. There's also the question of how regulators would see the move amid increased scrutiny of mega deals.