Disney to buy Twitter?

[DDLand]

So as a follow up to my analysis, my own opinion...

I'm lean cautiously optimistic. It really could be huge. Though I completely understand everyone's healthy criticism.

You can only imagine Iger and old media's frustration with themselves. They missed new media completely. Where were they in the early 2000s? In the mid 2000s? In the early 2010s? Why weren't we doing something about this a decade ago?

Where was Disney when Facebook was trading at $19 per share in 2012? Lucasfilm's value may have tripled in that time frame, but Facebook has grown even faster.

Stuff like that must haunt him.

They missed it completely. Now they're trying to play catch up. This would be a bargain buy if they could course correct and send it soaring.

My major questions are why hasn't Twitter been working before? What's it going to take to fix it? What does Disney do to complement it?

Is it just time it needs? Is it more spending? Does it need better advertiser outreach? Disney could technically help with all three of those things. Still, big questions remain.

I kind of like this acquisition though for several reasons.
1) It opens up a new doorway for growth.
2) It's bold and even a daring. Most call the Walt Disney company's buys logical or conservative. This would be a total departure.
3) It's at least something.
4) 300 Million users is still a lot, even though it's less than Facebook. Consider this... ESPN has 90 millionish subscribers. And growth could accelerate again.

Though this could all end up being an old media pretending to be new and having it blow up in their face. There's a high probability of that...

That's why I said I was cautiously optimistic.

 

[DDLand]

Per some people asking, Netflix is around 40 billion. Though part of their success comes from not being tied to any one content creator. Sure, they do create their own content, but it's small potatoes compared to Walt Disney or NBC. That means content creators would feel more confident in joining up, but it might not be the case if Disney owns it.

 

[rteetz]

I see their play here...

Currently Twitter is trading at somewhere around a 16 Billion dollar market capitalization. That's at least 16 Billion dollars that Disney would be required to cough up, not including the premium that the sellers would require. Disney could walk in and create or buy new technology worth a lot less than 16 Billion+ dollars. There are better internet streaming companies out there. This is quite frankly something simpler I surmise.

While synergies certainly exist between streaming and data collection and their existing content creation, I believe this is an old media company trying to diversify into new media. No media company has a dominate position across multiple mediums.

Google and Facebook control the web and social.

Google/YouTube, Netflix, Hulu, and Amazon control streaming.

Disney, NBC, Fox, and a handful of others control broadcast/cable.

Print is becoming irrelevant.

See a pattern? None of them cross markets except Google. Even they continue to struggle with social. The fragmented new media is completely cut off from old. It used to be considerably more consolidated. A handful of corporations owned or licensed out their names to all radio, television, and newspapers. Ad buyers knew exactly where to go to buy ads. A handful of player like Walt Disney, News Corp, and NBC.

Now the field is rapidly changing. The options are opening up more and more. Instead of only looking at a select number of players, they can use Adsense, or Facebook, or Netflix, or Amazon. Old media is starting to falter from a lack of new ad dollars. They're also failing to sell ads to millennials.

So while Disney still has an enviable Old Media business that will take decades to disintegrate, they also have a problem. They can see where the wind is blowing. They've been getting away with charging ridiculous amounts of money to access their channels, that most cable subscribers don't watch. In a post bundle world, that's a disaster.

How disastrous? Try 36$ per month disastrous:
http://www.forbes.com/sites/dorothy...ng-to-pay-36-per-month-for-espn/#71c1c7215798

So what to do? What can old media company do to try to offset its decline? It can grow its other existing businesses... Star Wars, Marvel, Pixar, WDA, and of course our beloved P&R. They have been doing that, but it's not enough. ESPN and broadcast are huge.

You do what Bob Iger has always done when the going gets tough, or when things are alright, or when things things great, or whenever...

Aquire a company that could actually grow quickly and supplement/enhance old media.

You buy Twitter.

Why Twitter? It serves to compare to other Social Media and Internet Firms. Alphabet (that whole rebranding thing is stupid) and Facebook. Both Google (yeah I'm calling it Google) and Facebook have been growing rapidly. They're either making more money than old media, or will within a couple years. It's clear to see which way the wind is blowing. Old media doesn't grow like Facebook is growing. It's insane, and I'm sure, jealousy inducing.

Right now Twitter, isn't making any money, in fact it's blowing through its cash hoard. What if it could be properly monetized? What if it could be turned into a Facebook like engine for growth? It would be huge. It would be enough to offset any losses at ESPN, and would firmly plant the Walt Disney Company not just as a media company of the 20th century, but as the 21st. They would have more in common with Apple, Google, and Facebook than they would with News Corp.

They could do all the streaming stuff for sure, but their ad and data sales would be unprecedented. Ad buyers could look at the field and ask themselves whether they want to work with several different companies to reach old and new media, or if they just want to work with one company that's guaranteed to reach a streaming audience, a social media audience, and a broadcasting audience. Disney would have the upper hand because they have a firm grasp on old and new. They would also understand the population's interests better than any other advertiser. They'd know what ads work on Television, online, and on social media. They could also monetize people's data in unprecedented ways.

Iger said one of his critical three points for leadership strategy was embracing technology (brands and international were the other two I believe). This is him boldly going down that road.

Now let's do a little reality check.

If new media and old media can coexist, why hasn't it happened yet? If Twitter hasn't been able to succeed, what could Disney do to fix it when clearly it's going down the tubes? When has Disney ever had a good tech acquisition? When has any media company ever had a good tech acquisition? Even Hulu, the broadcaster owned company, is smaller than Netflix. What makes Disney think they can just walk into social and do it right?

Can an old media company turn around and pick up the new media tricks?

I'd love for it to be true, but something tells me this could be the biggest mistake of Iger's career. If this doesn't work, this 16 Billion dollar mess will be on his record forever. No Avengers movie or Star Wars Episode 21 or 22 will take away the immense failure of a foolish 16 Billion dollar acquisition. His record had been almost untainted until last year, this would destroy him.

Iger's strength has been seeing, buying, and hiring great talent, and letting them work do great work unless they're imagineers. Twitter seems like it has one big problem. It doesn't have great talent or else it would be suceeding.

Well enough of all that. The implications are huge though. I wonder what this would do to the successor situation? Would Sheryl Sandberg dump Facebook for their biggest rival? Why would we want Jack Dorsey?

Anyway, that's my take on it.

Great breakdown thank you!

 

[rteetz]

Apparently this deal might not be dead yet.


http://www.investors.com/news/twitter-jumps-late-on-report-disney-revives-takeover-interest/