Apple's Winning Game Plan? Analyst Tells Why 'Golden ESPN Assets' Could Be The 'Shoe That Fits' Cupertino

Apple, Inc. AAPL has been aggressively looking to make a splash in live sports coverage, and an analyst at Wedbush thinks this could result in the tech giant lapping up Walt Disney Co.-owned DIS ESPN.

Live Sports A Serious Opportunity: Apple has come to realize that adding live sports content onto its Apple TV streaming platform is the “golden goose strategy” to increase subscribers going forward, said analyst Daniel Ives in a note. Apple TV+ currently has over 50 million paid subscribers on its platform, he noted.

The subscription number, the analyst said, got a boost from the company's 10-year Major League Soccer, or MLS, streaming deal when Lionel Messi signed with Inter Miami. This “game-changing” move has massively catalyzed the number of MLS Season Pass subscriptions around the world, he added.

Apple's Pac-12 TV deal talks to secure media rights to college football broadcasts on Apple TV have reportedly fallen through, the analyst noted.

“The massive appetite for live sports content remains the laser focus for Cupertino now to boost its streaming future and further tap into its massive installed base of 2 billion iOS devices worldwide,” Ives said.

“We believe the answer and the shoe that fits for Apple is the golden ESPN assets which potentially may be on the table in one form or another,” he said, adding Disney CEO Bob Iger and the board will likely strategically look at the Mouse House's core assets over the coming months.

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ESPN Best Fit? ESPN, according to Ives, is more attractive to Apple than Disney. “Apple recognizes that in this streaming arms race, there is a ‘closing window' for the stalwart to acquire content and cement its footing in the live sports content arena,” he said.

Acquiring Disney may not make sense for Apple as it is currently focused on a number of other key strategic initiatives, Ives said. But acquiring ESPN, which might carry a price tag of over $50 billion, would make a ton of strategic sense, he said.

With a potential ESPN acquisition, Apple stands to gain valuable sports content and major TV rights across each of the major professional and college sports packages, the analyst said. It would also “change the cross-sell opportunities and attractiveness of Apple TV looking ahead while putting Apple on the sports map globally,” he added.

Delving on another factor in favor of a potential deal, Ives said Apple CEO Tim Cook and Iger share a strong relationship. At a minimum, they could agree on major distribution partnership rights between Apple TV and ESPN that will likely help both platforms in a number of ways over the coming years, he said.

The analyst, however, pointed to antitrust concerns. There are many complicating factors including a hawkish Federal Trade Commission and the commission's Chair Lina Khan, he said. Despite all the pushbacks, Apple could now seriously pursue ESPN in its efforts to gain much-needed live sports content, he said.

Ives has an Outperform rating and a $230 price target on Apple shares.

Apple closed Wednesday's session at $176.57, down 0.50%, according to Benzinga Pro data.

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