Apple must buy Disney to make Vision Pro a success: analyst

Apple (AAPL) should buy Disney (DIS) — at least according to one media analyst.

Following Apple’s debut of the Vision Pro headset at the Worldwide Developer Conference (WWDC) on Monday, Needham analyst Laura Martin reiterated her opinion that the tech giant should take over the entertainment company.

“AAPL must purchase DIS to drive Vision Pro adoption,” she wrote in a statement released Tuesday. “The fact that DIS CEO Bob Iger took the stage and touted AAPL’s Vision Pro glasses demonstrates the compelling strategic fit between DIS’ content and AAPL’s wearable technology.”

“At a price of $3,500, we expect adoption to be slow. However, if AAPL buys DIS, its storytellers could create unique content to drive consumer adoption of AAPL’s Vision Pro glasses,” the analyst added.

Bob Iger speaks onstage at Apple’s Worldwide Developer Conference (Courtesy Disney)

Disney stock soared 4% as soon as Iger began speaking at Monday’s event. The CEO announced a new partnership between the two companies focused on the headset. Users can also watch Disney+ movies and TV shows in addition to a more immersive sports experience.

Disney shares have since stabilized, but the positive bullishness has been fueled by long-standing rumors of a potential merger between the two companies.

Martin explained that exclusive content will be key to promoting the new headset, noting how Steve Jobs secured iPod adoption by selling individual songs through music companies.

“Nobody would have bought an iPod if it didn’t have content that drives adoption,” she said. “[The VR headset] isn’t a huge product, so you have to have content that gets people using it.”

Martin stressed that the benefit to Apple is not only protecting intellectual property, but also protecting the storytellers.

“You can’t force Disney’s content creators to do anything unless you own them,” she said, dismissing suggestions that a partnership as opposed to full ownership would suffice since Disney uses its profits and losses (profits and losses) and wants to maximize revenue.

The story goes on

“My idea would be that it would be exclusive to that one platform,” she said, adding, “There’s more value for Apple to have these storytellers and tell stories specifically for an iPhone, an iPad, or a watch.”

Apple CEO Tim Cook poses for photos in front of a pair of the company’s new Apple Vision Pro headsets in a showroom on the Apple campus on Monday, June 5, 2023 in Cupertino, California. (AP Photo/Jeff Chiu)

Martin cited Disney’s lack of an Iger successor, as well as its declining linear TV network business, as key reasons for a merger. Apple’s $90 billion in annual free cash flow would help fund content creation.

Nevertheless, in addition to the regulatory hurdles, there is also a big question mark surrounding the parking business.

“I don’t think Apple wants Parks, but I think Parks is a really good standalone company. Private equity or some other type of REIT or real estate buyers would be a logical place,” she said.

Regarding regulation, the analyst said it’s not impossible for a deal of this magnitude to be approved.

“The way the laws are written here, it’s not anticompetitive to own a hardware company, or let’s call it a distribution company, to own a content company,” she said, referencing how Comcast was able to merge with NBC, which is a success similar in size to Disney’s then, on top of Amazon’s recent purchase of MGM for $8.45 billion in 2021.

“It’s possible that regulators would try to actually block it. But once you go to court, all precedents allow buying content through distribution,” she said.

Alexandra Canal is a Senior Reporter at Yahoo Finance. Follow her on Twitter @allie_canal, LinkedIn and email her at [email protected]

Click here for the latest stock market news and in-depth analysis, including stock moving events

Read the latest financial and business news from Yahoo Finance