- Disney's streaming service had the roll-out and the content Apple may be coveting.
- Disney and Apple have decades of close ties, including Steve Jobs and Bob Iger sitting on Disney's board.
- Apple has about $250 billion in cash on hand and 'should've bought Disney a couple years ago,' says media and tech investor Eric Jackson.
The two presentations couldn't have been more jarringly different.
Last month, Apple launched its hotly awaited new TV service, Apple TV+. Notable celebrities took the stage, including Oprah Winfrey, Jennifer Aniston, Steven Spielberg, Reese Witherspoon and Steve Carrell.
But the payoff was lacking. There were virtually no clips of actual show footage, leading to somewhat droning monologues from stars and creators.
More curious, there were no details about the service. How much would it cost? How much would Apple spend on original content? Could you bundle it with other Apple subscription products? When would Apple TV+ be available? Nothing. Why even bother with a launch with all of these key details missing?
Then it was Disney's turn to debut its streaming service, Disney+, last week. Celebrities were lacking, but Disney showed actual video of shows and movies, including surefire mega-hits "Frozen 2," The Lion King remake, and "Star Wars: The Rise of Skywalker," which will all eventually join the subscription service.
Disney executives methodically checked off all the specifics. The service will be $6.99 per month or $69.99 annually, underpricing Netflix. All programming will be available for offline downloading. Disney will spend $1 billion on original programming for the service by 2020 and more than $2 billion by 2024. Disney plans to bundle Disney+ with Hulu and ESPN+ for a discount (although no discount pricing was given on this point).
As the presentation went on, it grew clear that Disney+ is much of what Apple+ wants to be.
Apple wants family-friendly content. That's Disney+. Apple wants a recurring revenue subscription product to help change part of the growth narrative around the company. That's Disney+. Apple wants Hollywood's best to build branded content that fits with Apple's best-in-class mobile products. That's Disney+.
The ties between Apple and Disney are well documented. Disney CEO Bob Iger sits on the Apple board. Apple co-founder Steve Jobs also co-founded Pixar Animation Studios, which he sold to Disney in 2006. Jobs became Disney's largest individual shareholder after the transaction with approximately 7 percent of the company's outstanding shares, and served on Disney's board until his death in 2011. Disney has long been an early adopter of Apple products, including being first to put full-length TV shows on iTunes.
So where's the deal?
"Part of me wonders if Apple still might buy Disney before the November launch," said Eric Jackson, founder and president of EMJ Capital Ltd., which invests in tech and media companies. "Putting my conspiracy hat on, maybe that is why they both named it 'Plus.'"
Buying Disney would be an extreme action, as Disney would be buying a lot more than its streaming service. Apple would have to buy the theme park business, which took in more than $20 billion in revenue last year. It would have to buy ESPN and the traditional cable network business, the movie and TV production studio, and all the Fox assets for which Disney just paid $71.9 billion. It would have to buy the BAMTech streaming platform and the consumer products business and everything else that goes into a company with a $237 billion market cap.
Apple can afford it. It ended the first quarter with $245 billion cash on hand. Whether regulators would allow it is a different question.
"Apple should've bought Disney a couple of years ago instead of messing around with their buybacks, dividend and debt," Jackson said.
But if Apple doesn't want to bet the company on Disney, is there a licensing agreement to strike?
Disney will want Disney+ to be available to as many homes as possible, so it wouldn't want to restrict consumer access by limiting potential customers. But what if Apple somehow mixed its original content with Disney's product to offer a blended subscription service to Apple device owners?
Adding Disney content would give Apple+ a much deeper library. It would eliminate the "too many streaming services" problem. It would help Disney reach Apple device users (which, as Oprah said, "are in a billion pockets, y'all!")
It's possible Apple doesn't care as much about the Disney catalog and only wants to focus on original programming. Investors may be overvaluing the Disney catalog as a draw, said Rich Greenfield, a media analyst at BTIG Group.
"Apple will spend more on original programming in year one and at a lower price than Disney," said Greenfield, who still expects Apple's original shows to be free for device owners.
But the timing of the events -- and just how different they were -- is at least a little head scratching.
"If Apple rolled out Disney+ at their keynote, people would have swooned," Jackson said.
Perhaps it's not too late for Apple. After all, what's $300 billion among friends?