Since Nov. 21, when Disney revealed Bob Iger’s shock return as CEO and the ousting of his chosen successor Bob Chapek from the role, the informed speculation rumor mill about the Burbank-based entertainment giant’s future has been in a state of flux.
In a town hall with employees on Nov. 28, Iger dismissed the idea that another mega deal is driving this new era for executives at Disney. “We have a lot of assets here,” Iger told the staff. “Nothing is forever, but I’m very comfortable with each of the assets we have,” he added, specifically calling the idea that Disney could sell to Apple “pure speculation.”
That hasn’t stopped Wall Street analysts, investors, and longtime Disney observers from noting that Iger made Disney what it is today with a series of big swing bets — Pixar for $7.4 billion in 2006, Marvel for $4 billion in 2009, Lucasfilm for $4 billion in 2012 and assets of 21st Century Fox for $71.3 billion in 2019 – which have strengthened its intellectual property lead among rivals.
As Hollywood has ushered in an era where seemingly unthinkable deals are now discussed as possibilities, here’s a breakdown of the reasons for and against those bets.
Disney sells to Apple
Why it makes sense: Disney+ is growing fast, but it’s been expensive. Apple offers a quick solution with large amounts of money to fuel Disney’s streaming ambitions. Disney would also gain access to more than a billion Apple devices where the content would be integrated and promoted. In return, the tech giant would acquire Hollywood’s largest brand to complement Apple TV+, which has struggled to provide enough original content to compete. In addition, Iger has close ties to Apple and served on the company’s board of directors from 2011 to 2019. He noted in his autobiography, “I believe that if Steve [Jobs] were still alive, we would have merged our companies, or at least discussed the possibility very seriously.”
Why not: Maybe it can make sense. But despite the Justice Department’s clatter, it’s up in the air whether a sale to Apple would violate antitrust law, given that Apple TV+ only accounts for a small portion of the streaming market. If there was interest in a deal, the two sides could choose to wait for potentially better regulation after Biden. Apple would also likely have to burn through its cash reserves to secure a deal, which may not be wise given the recent downturn in the tech sector. Considering the tech giant’s disinterest in getting into the theme parks, there may be no enthusiasm for a deal on either side. — Winston Cho
Disney sells Hulu to Comcast
Why it makes sense: Hulu would likely engage in a bidding war and high sale price from interested parties, helping Disney raise some much-needed cash as the company tries to cut costs. Comcast CEO Brian Roberts has already publicly advocated a takeover of Hulu, issuing statements describing Hulu as a “phenomenal company” that would elicit a “robust auction” from parties, including Comcast, if it were too would buy. And with the push to improve NBCUniversal’s streaming business, where the Peacock streamer hasn’t generated any subscriptions, parent company Comcast could be willing to shell out big bucks.
Why not: Disney is already on track to buy out the remainder of Comcast’s 33 percent stake in Hulu by 2024 at a guaranteed sale price that values the streamer at $27.5 billion. Hulu, which has more subscribers than Disney+ in the US/Canada, attracts a more mature audience and generates the highest average revenue per user of Disney’s streaming portfolio. With Disney’s streaming losses reaching $1.5 billion, the company needs all the paying subscribers it can get. — J Clara Chan
Disney spins off ESPN
Why it makes sense: Disney is active in content ownership. Miracle? Star Wars? Frozen? Disney owns them. But sports? For Disney, sports at ESPN can be considered a rental. And while ESPN generates a ton of money (Disney’s “linear networks,” including ESPN, made $8.5 billion in profit last year), linear TV is declining. Disney needs to invest in the future, and the future isn’t an expensive linear TV channel where all the major rights can be poached by a tech giant in a few years.
Why not: The world is moving to ad-supported streaming and sports advertising is rules. The audience is bigger, people watch longer and there are natural commercial breaks. If Disney is all about streaming, sports should be part of it. And that cash flow? Why not take the profits and send them to streaming? And then there is the appeal of sports betting, which is growing rapidly. Disney may not own the sports, but it does own the ESPN brand, and that brand can be worth a fortune to the right gambling partner. — Alex Weprin
Disney buys Roblox or Epic Games
Why it makes sense: Despite its wealthy IP, Disney hasn’t found success with its in-house gaming endeavors (remember Disney Interactive, the gaming division responsible for $1.41 billion in losses between 2008 and 2013 and essentially shutting down in 2016? ); returning CEO Bob Iger even admitted in 2019 that the company isn’t “particularly good” at self-publishing games. Buying an existing, popular platform could boost Disney’s gaming ambitions and generate additional revenue, especially as it looks to expand into virtual and augmented reality.
Why not: Disney won’t have to make another expensive purchase if it can continue to license its IP to established gaming companies and developers like Electronic Arts, the strategy Iger stuck to at the end of his previous tenure. With Iger back as CEO, another potentially embarrassing attempt at gaming would be unlikely for an executive focused on polishing his legacy and finding a suitable successor. And if Disney does want to return to an internal strategy, the company doesn’t necessarily need a platform like Roblox or Epic Games. Fortnite. Instead, it could follow the Netflix model and buy smaller game developers to make quality games with Disney IP. — J Clara Chan, Georg Szalai
Disney merges with Netflix
Why it makes sense: The acquisition of Netflix would make Disney the undisputed leader in streaming, giving it access to a wider range of content and increasing its global footprint (Disney has increased its international expansion, while Netflix already has a presence in more than 190 countries). is). Netflix stock is down more than 55 percent in the past year, which may give it a more attractive price point. Plus Netflix co-CEO Reed Hastings recently revealed his fondness for Iger, tweet, “I had hoped that Iger would become president. He is great.”
Why not: In 2019, Disney closed a $71 billion deal for Fox assets that spawned a massive IP library, but even then some thought then-CEO Bob Iger was overpaying. With those assets, as well as the Marvel franchise and existing Disney IP, Disney has more than kept up with Netflix in streaming (235 million subscriptions across multiple Disney services; 223 million Netflix subscribers). Iger might conclude that Disney doesn’t need a more expensive third-party IP to be competitive, especially with Wall Street worried about Disney’s spending on streaming. Iger has already said he will keep cost-cutting measures in mind, starting with a plan to maintain Chapek’s planned hiring freeze, making a costly takeover even less likely. —Caitlin Houston
This story first appeared in the November 30 issue of The Hollywood Reporter magazine. Click here to subscribe.