The combined WarnerMedia-Discovery, a company that will likely have a market capitalization of more than $100 billion when it begins trading publicly next year, (assuming regulatory approval), has been structured to make a future buyout easier. Apple is one of a handful of companies that could afford to acquire it.
But it’s not clear whether Apple has any interest in a major media acquisition. The company’s history suggests Chief Executive Officer Tim Cook would shy away from a huge deal. Apple’s biggest deal ever was a mere $3 billion — for headphones maker Beats Electronics in 2014…
But, to quote a frequently used investment phrase, past performance is no guarantee of future results. Apple has made a relatively small investment in original content, with such series as “Ted Lasso” and “The Morning Show,” and Apple TV+ remains a minnow among streaming giants Netflix, Amazon Prime Video, Disney and the newly combined WarnerMedia-Discovery. If Apple wants to compete, the easiest way forward is to buy a media giant — and there are already some historical ties between WarnerMedia and Apple.
In 2015, Cook, Eddy Cue, Apple’s senior vice president of internet software and services, Jeff Bewkes, CEO of the then-named Time Warner, and former Time Warner Executive Vice President Olaf Olafsson met to discuss partnership opportunities around Apple exclusively offering Time Warner’s content, according to people familiar with the matter… During the talks, Bewkes and Cook broached the subject of Apple acquiring Time Warner… Cue expressed interest in a full acquisition, but Cook ultimately wasn’t ready to pull the trigger on what likely would have been a nearly $100 billion deal, two of the people said.
If Apple wants to stay in the streaming video world, Cook may need to buck the company’s history of avoiding big-money M&A. The WarnerMedia-Discovery deal isn’t expected to close until mid-2022. That gives Cook a year to do some serious thinking about his company’s future.
MacDailyNews Take: A massive acquisition now might make Apple even more of a target for overzealous antitrust crusaders, but there is plenty of competition in streaming media and Apple is, thus far, a niche player, opting to build a library from scratch that focuses on quality over quantity. We can’t imagine even the most regulation-happy politicians objecting to an Apple acquisition of WarnerMedia-Discovery on competition grounds, but it may draw their interest to other parts of Apple’s wide-ranging business. So, there’s a lot to think about when it comes to a massive acquisition that would be 33+ times larger than anything Apple has done before.