No, Apple Should Not Buy Disney

This morning I received a notification from Yahoo Finance of an article headlining, “Apple needs to buy Disney to make Vision Pro a success: Analyst.” Without breaking into too much of a tangent, one fact about me is that Yahoo often irks me with ridiculous content and I can’t help but make fun of it. Perhaps I’ll elaborate on my relationship with Yahoo at a later time, but today I’m going to take the opportunity to write in opposition to the above article.

“AAPL needs to buy DIS to drive adoption of Vision Pro,” she wrote in a note published on Tuesday. “The fact that DIS CEO Bob Iger was on stage touting AAPL’s Vision Pro goggles demonstrates the compelling strategic fit between DIS’s content and AAPL’s wearable technology.”

First and foremost, as showcased in the WWDC 2023 presentation and mentioned in the above quotation, Disney is already collaborating with Apple to provide content for the Vision Pro. So, what benefit to Apple would buying Disney have? None! Apple already gets the benefits the analyst presented, so buying Disney would be nothing more than a business investment (and a ridiculous one at that).

Disney is much more than just its content: it’s a $169 billion company that produces movie and television content, theme parks, resorts, music, merchandise, retail, and probably a lot more we don’t notice. Those who watch Disney’s stock know well all the woes it’s facing, like ESPN unsubscribers, disappointing streaming numbers, the Disney World feud with Florida’s governor, and I’m sure many others. Thankfully, Disney’s financial performance has recently improved, but it’s not home-free yet. Apple doesn’t want that.

According to many business experts, such as Steve Jobs and noted in Good to Great by Jim Collins, great companies find success when they focus on doing a few things very well. Apple is a smart company (arguably the best-run company in the world) and knows this key to success. Apple’s expertise is in upscale hardware and software; it doesn’t have expertise in running a giant content company, in addition to theme parks, resorts, and Disney’s other business lines. Frankly, the fact that Apple is pulling off producing quality, original content right now is surprising to me, but we’ll see how long it lasts.

Despite Apple’s record cash-pile near $56 billion, that cash still wouldn’t buy Disney for $169 billion, so it would require a leveraged buyout which would put Apple in a needlessly risky financial situation (it’s already 156% leveraged).

Finally, Apple doesn’t need Disney for its Vision Pro headset to be successful. There will be plenty of other content producers. Additionally, it’s important to note that the Vision Pro doesn’t appear to be positioned to sell out within the first 10 minutes like the iPhone X. It seems to me that Apple is adopting a skimming marketing strategy for its AR headset, where a company charges a high price for its first edition to “skim” enthusiastic early adopters in the market. This marketing strategy is sensible to deter scalpers, as well as giving Apple and other developers more time to make the product ready for the mass market.

For these reasons, Apple should not buy Disney and likely never will.