Apple Buying Time Warner?

 As we all know, Rupert Murdoch is relentlessly pursuing Time Warner -- so far failing on his $80 billion bid.  But, he is not alone in his interest of this major content player in this multi-platform era where premium content is increasingly king as distributors increasingly fight (and are willing to pay top dollar) for it.  Following Murdoch’s lead -- and spurred into action precisely because of it -- other behemoths likely are either now in the hunt, or, soon ready to join it.  And, that list may very well include some unusual (seemingly unlikely) suspects -- mega-players from Silicon Valley (not just Hollywood).  After all, Google, Amazon, and Apple are now absolutely media companies in their own right -- and for their own reasons.  And, their assets dwarf those of Rupert’s.  While Fox’s market cap is about the same as Time Warner’s $70 billion, Amazon’s now is $150 billion, Google’s is $400 billion, and Apple’s is near $600 billion.

Ahh, yes, Apple.  Let’s take Apple.  Purchasing Time Warner would be a logical (or, at a minimum, certainly not illogical) move.

First, let’s not forget that Apple’s heritage via Steve Jobs includes Hollywood in a big way.  Pixar, a major content player, was his baby (and now is Disney’s).

Second, Apple, of course, just recently demonstrated its thirst for content by buying Beats and Beats Music for $3 billion.  Apple faces a similar dilemma -- a lack of on demand streaming content -- on the video side, which is widely seen as being the primary reason that Apple has not yet launched its long-anticipated “all-in-one” iTV.  Time Warner would give Apple a treasure trove of premium video programming, including HBO (perhaps the single most prestigious video channel in the world today) and live sports via Turner.  Lest we forget, live sports are the essential ingredient for linear TV and for Apple’s likely designs to compete directly with the cable companies -- and Google -- by offering a virtual OTT MSO service.  With Time Warner’s programming, Apple would finally have a critical mass of compelling content to effectively follow its tried-and-true playbook -- i.e., seamlessly marrying beautiful hardware (in this case, the iTV) with the compelling content that sits on top of it (i.e., in this case, the video programming).  It is precisely that content that drives Apple’s hardware sales.  THAT is its model.  Premium video television and movie programming would be the Trojan Horse to sell massive numbers of units for the living room.  

Third, on the flip-side, Apple’s ownership of that same critical content would make it highly challenging, to say the least, for competitors like those same cable companies, not to mention OTT service providers (Netflix, Amazon, Hulu), to negotiate for that same critical premium video content.  Apple would have some interesting cards to play.

Finally, Apple, more than anyone, has the means to make this happen.  Let’s not forget that Apple’s stockpile of cash is massive.

Sound crazy that a tech/hardware company like Apple could have real interest in swallowing up a traditional media company like Time Warner?

Perhaps not so much.  There is much precedent for technology hardware companies going Hollywood.  Sony did it long ago, buying Columbia Pictures in 1989 and operating one of the major studios ever since (with varying degrees of success).  Fellow Japanese conglomerate Matsushita also tried “back in the day” (1990), but failed -- selling to Edgar Bronfman and Seagram after a mere 5 years.  The clash of cultures was simply too great.

But, Apple’s heritage isn’t as extreme -- and, creativity (and story-telling) has always been at its core.  So, don’t be surprised if Apple marches to the Beats of its own drummer and takes on Mr. Murdoch.