Analyst: ‘Apple has made a major strategic mistake not buying a Hollywood studio’

Despite bonafide hits such as comedy series “Ted Lasso,” drama series “The Morning Show,” and the miniseries “Defending Jacob,” Apple is seen by some Wall Street analysts as lacking multiple, regular breakout hits, leading some to argue for a Hollywood studio acquisition.

Analyst: 'Apple has made a major strategic mistake not buying a Hollywood studio'

Georg Szalai for The Hollywood Reporter:

“Apple has made a major strategic mistake not buying a Hollywood studio while Amazon, Disney, Netflix and others run away with content,” Wedbush analyst Dan Ives says. “Content is king, and Apple built a mansion with hardly any furniture in it. MGM was a no-brainer acquisition for Apple, and they missed a huge opportunity.”

Hal Vogel, CEO of Vogel Capital Management, suggests that Cook is “afraid of shareholder blowback if he goes Hollywood in a big way.”

MacDailyNews Take: Or he’s afraid to spend nearly 3X as much money as Apple’s biggest acquisition to date ($3B for Beats) with an uncertain return on the investment.

AT&T’s $43 billion deal to merge WarnerMedia with Discovery and Amazon’s MGM buy underscores the “intensifying streaming wars as a potential catalyst for the next wave of industry consolidation, with some of the big tech companies increasingly seen as potential acquirers,” CFRA Research analyst Tuna Amobi says.

Apple could choose to ramp up its Hollywood division with a mega buy of a studio the size of, say, Lionsgate, which gets mentioned as a possible takeover target given its relative lack of scale — Lionsgate’s market cap is $3.8 billion, while Apple’s is $2.1 trillion — as well as its 17,000-title library and film and TV franchises like “Hunger Games,” “Twilight” and its Starz drama “Power.”

MacDailyNews Take: Apple is looking for fresh quality content for Apple TV+. They can do that by contracting with quality producers, not studios, as they have been doing for years now.

For just a few examples:
• Apple TV+ signs Natalie Portman and Sophie Mas to multi-year first-look deal – March 17, 2021
• Apple inks multi-year, first look feature film deal with Ron Howard and Brian Grazer’s Imagine Entertainment – March 11, 2021
• Apple TV+ signs multi-year first-look deal with Martin Scorsese – August 11, 2020
• Ridley Scott inks multi-year Apple TV+ overall deal – May 13, 2020
Apple inks deal with movie studio A24 to make feature-length films – November 15, 2018

This strategy does not preclude taking a concurrent track by making the right deal at the right price for a Hollywood studio in the future.

24 Comments

  1. Back in the 1980s Sony was the #1 tech/consumer product company in the world. No one else was close . . . Then in 1989 they bought Columbia Pictures which became Sony Pictures — and the subsequent bureaucracy and financial losses from the film business distracted Sony from making the best products in the world . . . Apple is well aware of this history, and it informs the caution they take when pursuing acquisitions . . . Apple does not want to acquire a company in which the executive team and bureaucracy of the acquired company (eg- Warner Bros.) is bigger than Apple’s.

    1. Tim Cook not listening to the moron Pretending rd to be Tim Apple is a Really Great Thing. The fake tim above is just some lookooooooooookooser.

  2. Tim, is smart but scare to run a company as dynamic as Apple. He has always lacked the ability to effectively multitask with products and has never possessed an vision. He is not a number 1, not the leader. So sad. Had he had a greater capacity Apple would have been growing in dimensions as Amazon, but not evil. He could purchased Netflix for a fraction of what he has spent on Apple TV content. He thinks to slow without vision. I have been a loyal Apple investor for over 20 years. Made a boat load of money, however my favorite company needs greater leadership.

    1. Intelligently and factually stated. Yes, Apple needs a creative visionary leader and send Cook back to his previous role under Jobs or fire him outright. It is painful to watch Cook’s stumbling, bumbling, timid cautious approach to Apple growth. His Number 1 priorities is watching profit balance sheets, bowing to Chinese censorship and making sure the iPhone gravy train is on schedule. Even there, he has faltered in the past. Time to THINK DIFFERENT Apple!…

  3. Tim is great at his core strength; logistics. But he is not as effective as pretending to be Steve; He lacks the creative instincts and vision to boldly go where no one has gone before. Of course many creative people still work at Apple and lots or good ideas still make it to market but its progress by community; Safe and steady, which I guess is better than foolish recklessness but Steve Jobs is missed everyday at Apple. You can’t replace the OG. I guessing Tim’s replacement will be a “safe” choice too so maybe Apple days as being the market leader and innovator are over.

  4. Cook failed at launching the “skinny bundle” years ago, then sleep walking while many media mergers were possible particularly MGM at chump change price. Simply too many “missed opportunities” for analysts to ignore. IMHO thought the best fit was Disney a pristine experience if you have ever visited Disney World and deep entertainment assets. Cook instead went the ELITIST hold your nose in the air route of original high quality programming only and that route has held them back from greater reach…

  5. I ran MGM TV for many years in the 90’s and into the 2000s. Amazon has no idea what it just bought and how complicated the UA library is from a rights standpoint (The MGM library is owned now by Discovery). Libraries bring you tonnage, but it’s original programs that drive viewers and streaming success. The next best studio to buy would be Sony but that price tag is, based on Amazon wildly overpaying for MGM, going to be north of 20b! Lionsgate is not worth the time of day. Buying MGM would have provided Tim Cook and Apple nothing more than a big headache!

    1. Since Amazon already has a respectable content library and a good stable of awarded programs, my take on the MGM purchase for Amazon is more for character rights to create their own spin-offs/expansions of existing past works in addition to obtaining the rights to the past works themselves. Apple would have a different reason for an MGM purchase should they have even considered it.

  6. I’ll tell you a secret: Apple Glasses + AR + ATV+ = a new generation for content. Yesterday’s and today’s shows will be flat compared to what’s coming in the next 5 years. That’s what ATV+ is fir—for then. Until then it’s just about slow momentum and learning the lay of the land so they can capitalize on the next generation of visual storytelling media

    1. I think that depends on who buys it and what synergies the purchase has to what the purchaser already has control over. In Amazon’s case it’s almost a no brainer. They have existing resources that can create Amazon Original spin-offs of acquired franchises. They also are one of the biggest distributors of physical media of those franchises they will be acquiring meaning that they won’t have to pay anyone else for rights to create or sell DVD/Bluray of those franchises. Existing agreements by MGM with the companies currently producing physical media of the MGM franchises means Amazon doesn’t have to lift a finger to create new agreements. For any other acquirer the MGM acquisition would not have as big a benefit as it does for Amazon.

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