Josh Centers, writing for TidBITS:
Telecom giant AT&T is seeking to purchase content giant Time Warner (which is no longer affiliated with Time Warner Cable, see “AT&T Aims to Buy Time Warner for $84.5 Billion,” 24 October 2016). However, the deal could run into regulatory obstacles, with politicians on both sides of the aisle questioning the merger. It also doesn’t help that the Department of Justice is suing AT&T subsidiary DirecTV.
And:
Goldman Sachs is reportedly pushing Apple to make a competing bid for Time Warner, but Apple is resisting. However, I think Apple should consider the possibility. Here are four reasons why.
This is a great, thoughtful read. Should Apple spend the cash to instantly acquire one of the biggest, highest quality content libraries on the planet? Would they burn bridges in doing so, alienate players they are trying to bring to the table?
I find this all a fascinating business.
Its interesting to speculate, particularly if you own stock in Time Warner. Apple could pay any price for TW, but is it really worth $84.5bn? I’m not confident it is.
TW owns, HBO, Cinemax, TBS, CNN, TCM, DC Comics as well as a number of other smaller assets and subsidiaries.
Probably not. This is not Apple’s forte and it would largely be an expensive tool to get a foothold into the media game. I see Apple’s ventures into content creation as a hobby, much like their Apple TV was a hobby for years. I’d say if Jobs were still around, then maybe this could work, given Jobs experience with Pixar. But I really don’t see a rush for Apple to own a major media company. What I do see is TW shareholders eager to boost the price of their shares in a bidding war between AT&T & Apple.
And Goldman, they just want a big M&A deal. Peter Oppenheimer, Apple’s previous CFO, is now on the Board of Directors for GS.
“This is not Apple’s forte and it would largely be an expensive tool to get a foothold into the media game.”
Yes. Incentives should be considered when reading arguments about how Apple “needs” to spend its cash.
What’s more, these discussions about certain Apple acquisitions ignore the eventual anti-trust pitfalls.
The answer is NO. All the techies savor the potential without looking at p/l. This would be a bad deal at half the price.
finally, you report that DirecTV is being sued. That’s all you need, a company being sued.
Not only for the reasons you outline, but Apple is essentially buying at TW’s 15-yr peak just as a new administration takes office that has the potential of creating a great deal of, let’s say, tumult.
Spend $85B for TWX. Suppose three years later the country is in the midst of a recession and TWX is now 35% off its late 2016 value. (That’s about where they were three years ago actually.) Apple could have acquired for $30B less.
Now is the worst time to make an acquisition of this size.
Apple is Noah. They build the ark for the coming flood. They don’t need to do anything but build the ark, watch the skies, and provide space for the animals (media companies). All are invited.
When the rains come, and they definitely will, the animals can get on board or their ass can drown.
Apple doesn’t need to acquire for their Apple TV strategy. I don’t think the goal with Apple TV is to be big in TV just as the goal with Apple Watch isn’t to be big in watches, or the goal of the iPhone is to be big in telephony. Supposing a TWX acquisition worked fantastically well, it would only result in Apple “winning” TV. That’s small potatoes.
still not getting how this sells more hardware.
I think Apple should go the other way and split itself up. Get smaller.
What made Apple great was they were small and user-driven. They had to make products that users wanted because otherwise the company would go out of business. What made Apple Store great was that everything in there worked with everything else.
If you look at how Beats is independent of Apple, that could be a model for Mac, Inc and iTunes, Inc and so on.
If they spin off Mac, Inc then the Mac lineup could be modernized instead of held back to artificially boost iPad. If they spin off iTunes, Inc then they could run iTunes on every set-top and phone, not just on Apple devices. They could run every TV service on Apple TV equally.
The CEO of Mac, Inc certainly wouldn’t want to go into 2017 with like 8 Macs and they are all typewriters. That would be so embarrassing and so insulting to users it would be kind of a scandal.
It doesn’t. It generates transaction commissions.