The television industry is in free fall. So I have a not-so-modest proposal: Time for Apple to jump in with both feet and buy HBO — along with the rest of Warner Bros. Discovery, the company that owns the network.
But now I think Apple should spend real money and buy WBD. Not just HBO, but also Warner Bros. Studios, along with CNN and a host of cable channels in terminal decline.
of why here it is very simple. Apple has been interested in HBO in the past and has already spent many billions trying to build its studio and streaming service — with mixed results. They can continue to do that, or they can simply buy a company that already has a successful studio and streaming service.
And then do nothing. At least not immediately.
It might be tempting for Apple to try to cram MacBooks and AirPods Maxes into HBO shows — as it does with Apple TV Plus programming — but the right call would be to back off and let the people who already run HBO and Warner Bros. doing what they’re doing — doing things that lots of people like, watch and pay for.
And, most importantly, to keep selling it all to anyone, whether they’re paying to see this stuff on an iPhone, in a theater, or on decent cable TV.
The money part is also pretty straightforward. WBD’s stock has gotten steadily cheaper since the day Discovery and the company formerly known as Time Warner merged in April 2022. But now that it’s clearly a failed merger, it’s on sale for more than two-thirds, with a market cap of $17 billion. Throw in $40 billion in debt and you’re looking at an enterprise value of about $60 billion.
So maybe, after a premium, all of this costs Apple $70 billion? That is: What did Microsoft pay for Activision a few years ago?
That’s very, very possible for a company worth more than $3 trillion that it produces every year EARNINGS of 100 billion dollars.
And then, boom: Apple’s services business—the part of the company Apple should continue to grow as its hardware business slows—immediately increases by nearly 50%.
Will there be problems with regulators? Absolutely, no matter who wins this fall’s election.
It’s one thing for a tech company to buy a small studio and 50% of the James Bond franchise. It’s quite another to put together a conglomerate that owns CNN, a bunch of other TV networks that some people still watch, and one of the industry’s biggest producers of movies and TV shows. Many people would have thoughts that Big Tech will get even bigger with this.
On the other hand: The current owner of those properties is failing. It’s a reasonable bet that someone another will master this thing eventually. And if you’re worried about antitrust, it’s probably better for it to go to companies like Apple rather than a competitor like Comcast, which would mean more consolidation.
Also! While Tim Cook is no Steve Jobs, he has proven to be a very deft political operator – he’s the guy who managed to keep both Xi Jinping and China’s Donald Trump happy with him simultaneously. He could fix that too.
There’s another problem with this fantastic deal: The reason WBD and Paramount just got $15 billion in sign-ups is that they’re saddled with profitable but declining cable TV networks.
And tech giants like Apple have made it clear for years that they want nothing to do with those businesses. When Discovery — a large collection of cable channels — merged with Warners — which has its own collection of cable channels — a few years ago, tech executives made it clear that the company had just become an even more unattractive acquisition.
But then again, WBD was worth a lot more a few years ago. Maybe now it’s cheap enough to be worth the pain of owning and operating declining TV networks.
Or maybe it isn’t, and Apple just turns around and turns those networks over to a private equity buyer. Someone who relishes the opportunity to buy a hard-to-find asset that still throws in a ton of cash.
In that scenario, Apple would end up pulling off the WBD split that was reportedly considered and abandoned just weeks ago: keeping the good part of the company and selling the bad part to an open buyer.
OK. So that’s cool too, right? Maybe.
But it also seems a lot more believable than it’s ever been. And if Tim Cook is looking for a big, signature move — other than the Apple Vision Pro no one seems to know what to do with — before he retires, he could do worse.