Disney woes a signal for Apple to make a move, says analyst
Disney’s stock woes are leading to calls for tech giant Apple to swoop in with a marriage proposal.
Rosenblatt Securities analyst Bernie McTernan is calling on Apple to pounce on the Mouse House now that the coronavirus panic has shaved $85 billion off its valuation — reducing its market cap by one third last week.
McTernan believes Disney’s new streaming service, Disney+, could bolster Apple’s foray into video streaming.
“Disney+ could solve Apple’s content problem as we believe AppleTV+ is off to a relatively slow start,” he said. “We believe those with longtime horizons, like mega-cap companies with large cash balances and whose equity outperformed Disney over the last three weeks, like Apple, could take advantage of the volatility,” McTernan said, offering that Disney’s market capitalization last week was approximately $165 billion, while Apple has about $107 billion in cash and securities.
“The upside from acquiring Disney would be securing their content/streaming strategy and potential synergies from adding the emerging Disney ecosystem to the iOS platform,” he added.
Disney’s stock woes — down another 7 percent midday Monday, to $95.10 a share — will likely continue as the coronavirus pandemic unfolds due to the vulnerability of its theme parks, which have been closed to prevent the virus from spreading.
In 2019, revenue from theme parks accounted for nearly 27 percent of Disney’s total revenue of $24.7 billion. And MoffettNathanson analyst Michael Nathanson has estimated that the theme parks business will lose about $1.3 billion in earnings and $1.55 billion in revenue for all of April.
One bright spot for Disney is its nascent streaming service, Disney+, which launched on Nov. 12. At launch, Disney said it signed up 26.5 million subscribers to Disney+ by the end of 2019 and 28.6 million as of Feb. 3.
Apple, which launched Apple TV+ on Nov. 1, hasn’t released any subscriber numbers, but analysts have estimated that it’s attracted half as many subscribers as Disney+, even though Apple is giving its product away free for the first year — and charging only $4.99 after that. Disney+, by contrast, costs $6.99 a month.
One problem is Apple’s small library of content, including a handful of original shows that have garnered mixed reviews. Although Apple drew praise for its marquee series, “The Morning Show,” starring Jennifer Aniston and Reese Witherspoon, the company hasn’t had any other meaningful releases since it debuted last fall.
Sources have told The Post that Apple execs are at odds over the company’s streaming strategy. And Apple’s leaders don’t yet know whether they want to mimic Netflix or be more of a distribution platform with some original shows.
Neither Apple nor Disney commented.
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