Guilty by Acquisition

Source: AppAdvice

In the current popular culture climate, Disney holds the greatest reach regarding dominance and control of entertainment. If anything, the Disney name is synonymous with children’s entertainment, a cornerstone in the entertainment industry, bringing intense amounts of money every year and molding the popular culture to ensure continued success.

Under the leadership of the current Disney CEO, Robert Iger, the Disney company has seen immense growth unlike any other time period in the company’s existence. Since 2009, Disney stock has grown from 16 dollars a share to nearly 115 dollars a share. Most financial experts would attribute this rapid growth in such a short period of time to the acquisition of both Marvel Comics and Lucasfilm, two business moves by Bob Iger that were guaranteed successes (not to understate the importance of these actions).

Since these acquisitions, Disney has used their properties to take near complete control over the entertainment industry. The company itself still develops films based on its own independent properties, which continue to rake in money unlike any other animated films on the market, but releasing both the new Star Wars films and The Avengers series is quite impressive for any entertainment company. Owning, and profiting most of the film blockbusters in the past 5–10 years is enough to attain dominance of entertainment, let alone the control of the sports broadcasting industry found within the ownership of ESPN, matched with a relatively strong foothold they have in the mainstream media with the juggernaut that is ABC.

Recently though, many rumors have surfaced regarding the future of the company, specifically regarding whose hands the company will be placed in. In a recent publication by the Wall Street Journal, the rumor was revitalized, referencing the dominance of Netflix in the entertainment industry as one of the most likely reasons for the buy-out.

Source: Twinfinite

If one can point to an brand name in the entertainment industry that has more inherent value than Disney, it would most likely be Netflix. Constantly growing in popularity, and defined as a necessity in the modern household, Netflix retains one of the largest viewer bases in entertainment distribution, forcing the entire industry to rethink the method in which people access media in the internet age. Because of the rush to meet the needs of modern day consumers, many believe that the next logical step for the Disney company is to purchase Netflix and the assets it currently holds. Long story short, the yearly decrease in viewership of both ESPN and their cable Disney Channels is forcing the company to look for an alternative manner of distribution, that being modern streaming services. In the past few years, Disney has moved towards streaming services through partial acquisition of Hulu, but the name brand that is Netflix is a juggernaut that Hulu has proven to be unable to overtake. Disney can’t single-handedly beat Netflix. No matter what they try, it seems to be impossible to defeat the media streaming giant.

However, the enemy of my enemy is my friend.

In an ironic twist, the company that is arguably more important and influential compared to Disney is Apple. As everybody reading this article already knows, the Apple moniker is deeply ingrained in the 21st century society. A majority of technologically minded people on the Earth have an Apple phone, and the iPhone brand has dominated the smartphone market. The primary medium of content consumption is through the usage of smartphone, so Apple would benefit to own one of the largest entertainment companies for possible content exclusivity or introduction of technology to the variety of Disney market ventures.

Source: HDWPro

Here’s a fun fact by the way. Most Disney historians credit the revitalization of Disney to the return to style that Disney found with the Pixar brand, specifically the marvel that was Toy Story. That era of Disney animation, and the cultural relevancy that was in turn developed, ushered in the second golden age of Disney that continues today. When Pixar was developed, it was headed by George Lucas at Industrial Light and Magic (ILM) until Lucas realized that the group would no longer benefit in his company. From there, Steve Jobs took the group under his wing and continued to support John Lasseter and his team until their short films grew into the movie making company we know today. The constant support by Steve Jobs allowed the company to flourish, and their mentality for animation development was perfect for the Disney company. Following the success of the first two Toy Story films, Jobs sold Pixar to Disney to continue this prosperous relationship, gaining a 50.1% stock majority in the Disney company. Following Steve Job’s death in 2011, and continuing to this year (2017), the Jobs family have been slowly cutting their stake in the company to minimize their standings (Theres a lot of technicalities, so I highly suggest you read about this here http://www.barrons.com/articles/steve-jobs-family-cuts-disney-stake-in-half-148594605). Understanding this relationship gives background information about the strong connection between the two companies.

Anyways, to combat the ever changing entertainment market, a joint operation between the two companies would prove to be extremely impactful on the industry as a whole. Disney would have direct connection to Apple technology for their theme parks, and a direct platform to distribute their content to the widest possible audience. Apple would make their first move into development of actual content, and could benefit from the revenue of Disney, Marvel, and Lucasfilm properties. As far as mergers go, this would prove to be economically beneficial.

That being said, even after all of these benefits, it’s quite unlikely that any buyout would occur. Firstly, many project that Apple would be purchasing the Disney company for around $237 billion, but they made only $9 billion in revenue in 2016 (venturebeat.com). It is unlikely that a buyout of this size by Apple would be economically feasible, specifically regarding the fact that given their economic situation, they would come out in the red after 2017 if they dropped $237 billion.

Source: Engadget

In addition, Apple hasn’t been one to concede to the will of other company. Apple tends to play to their own game, and would much rather support themselves over a direct support if an opposing group. Essentially, it is unlikely that a company such as apple would purchase the Disney company to give them exclusive content distribution or other benefits that would act as support for the newly acquired group. One of the most popular blemishes on the iPhone brand was the forced download of the U2 album “Songs of Innocence”, denying users the right to choose what they can or cannot access. It would be unlikely that Apple would pull a stunt like this again, due to the controversy it drew years ago. If Apple purchased Disney, it would be nothing more than a power merger rather than a complete overhaul of the two brands.

Finally, given the prosperous years that the Disney company has faced, there’s nothing stopping Disney from continuing their independent business venture in the hopes of increased power in the industry. The relationship they currently hold with Apple provides for a stake in the smartphone industry, and omits intervention in either company’s affairs.

Source: Nerdist

This leaves only one small issue, the position of Disney in the entertainment industry. Within the next few years, Disney has to make some movement towards intervention of the streaming platform to maintain cultural relevancy. The fact that their entire film library is not available on at least one streaming service may prove to be a litmus test for their future plans regarding the entertainment industry.

To maintain cultural relevancy requires significant effort to match the times, and Disney may be getting too comfortable in their current situation. They may believe that they are the king of the hill now, but falling behind the times would ensure a slow and painful death for the media giant. The people will move on without Disney when it becomes too difficult to consume their content, so the next five to ten years should be spent on modernizing their business strategy. Without a concrete plan for the future, it is unlikely that Disney will survive the shift to streaming platforms and modern media consumption. Rumors of acquisitions like these give an insight to the discussions that are going on behind closed doors, and these insights seem to paint a shaky future regarding the lack of interest companies have towards changing norms of industries.

Ryan Dorman is a Columnist for the Boardwalk Times.

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