Federal entities will block any attempts made by Apple to execute an acquisition of The Walt Disney Company as the Biden Administration continues its aggressive push to keep such deals from being made.
Since veteran CEO Bob Iger was first reinstalled at the helm of The Walt Disney Company days before Thanksgiving 2022, there’s been wild speculation about whether a buyout of Disney is on the table as an antidote to the many financial woes the company now faces, ignited by an anonymous Disney insider who, in late November 2022, told a journalist with The Wrap that he previously worked with Iger and knew that the then-71-year-old boomerang CEO would be interested in selling.
“He’s going to sell the company,” the insider said during an interview. “This is the pinnacle deal for the ultimate dealmaker.” He continued, saying, “Landing a deal with Apple–or some other megabuyer–would also cement Iger’s legacy, [and] I think he’d welcome it.”
Apple is Known for Its Innovative Ideas, but a Disney Buyout Isn’t One of Those
But regardless of the chatter online about an Apple buyout of Disney, representatives for the tech superpower say Apple has no interest in such a venture, though the prospect of a merger was once on Iger’s mind, especially as Disney and Apple’s founder, the late Steve Jobs, had a long history before his passing in 2011. Jobs not only owned Apple, but he was part of the financial backing behind the creation of PIXAR Animation Studios. Jobs, John Lasseter, and Ed Catmull began PIXAR years before Toy Story made its theatrical debut. Disney purchased PIXAR for $7.4 billion in 2006.
In his biography, titled The Ride of a Lifetime: Lessons Learned From 15 Years as CEO of The Walt Disney Company (2019), Iger admits that a more formal partnership between Disney and Apple would have been likely, had Jobs lived.
A Much Bigger Roadblock Spells Trouble for a Disney Buyout
But even if a potential acquisition of Disney were to magically turn into the probable acquisition of Disney, one enormous roadblock remains–one that could halt a Disney buyout altogether. That’s because despite the current state of Disney’s ledger book, the company’s semblance of desperation for a financial solution, Iger’s musings about a union with Apple, Disney’s shareholders’ opinions about an acquisition, or a potential buyer’s interest in the House of Mouse, there’s yet another force with which to be reckoned–one that’s already proven its aversion to the marriage of mega-conglomerates in the U. S. marketplace.
Under the Biden administration, the Federal Trade Commission (FTC) and the United States Department of Justice (DOJ) have begun buckling down on mergers and acquisitions, especially when the proposed ventures are red-flagged as having the potential to take a strike at free enterprise and create monopolies. The federal government’s renewed approach to ensuring anti-trust measures are taken could easily tank any hopes of a Disney buyout or merger, especially if the merger involves another entertainment or big tech company.
Anthony Sabino is an attorney and a professor at St. John’s University in New York, who describes himself as an “insane Disney fan”–one who puts no stock in recent chatter about a potential buyout of Disney by Apple, or any other mega-corporation, for that matter, as he says such a venture would be like “walking into a bear trap.”
“It’s a given,” Sabino explained, “it’s an absolute certainty that if there was some talk of Disney merging with somebody else, that would be scrutinized to the nth degree by the Federal Trade Commission [and] by the Department of Justice.”
The very first anti-trust legislative measures were taken more than 130 years ago when Congress drew up and passed the Sherman Anti-Trust Act of 1890, which was put in place to protect competition in the marketplace and prevent the development of monopolies. Over the years, two additional anti-trust laws were passed, and together, the three statutes have been used as guides to help maintain a marketplace in the United States in which competition continues and both consumers and employees are treated fairly when it comes to costs and hourly wages.
The Biden Administration Gets Aggressive in Preventing Such Deals Between Companies
Under President Joe Biden’s administration, the federal government has become more stringent in its enforcement of anti-trust statutes on entities that want to merge their companies and for those seeking to acquire another entity. According to The Hollywood Reporter, “a Republican administration may prove to be more lenient when it comes to a major deal,” like one in which Disney might be involved.
Feds have also made legislative changes that give companies more proverbial “hoops” through which to jump when seeking to complete deals. In 2022, the federal government noticeably increased its scrutiny of companies seeking to make such changes, and in late December 2022, the president signed into law the Merger Filing Fee Modernization Act of 2022 (the MFFMA), which brings changes to the former structure of merger filing fees paid to the federal government–especially for larger transactions.
Under the MMFMA, fees are based on the amount of the transaction. As many experts agree that the acquisition of Disney would cost a potential buyer a minimum of $225 billion, the filing fee would be $2.25 million under the new law. While for Disney–and any entity with the purchasing power to buy out Disney–the payment of such a fee would be largely uneventful from a financial standpoint, doing so is just the first step in the process.
Feds Create More Obstacles to Stave Off Deals That Create Monopolies
Once the premerger notification is filed with the Federal Trade Commission and the Department of Justice, a waiting period of (usually) 30 days begins, after which the proposed deal is thoroughly reviewed, and assessments about the deal’s potential to create a monopoly or to create an anti-competition in the marketplace are made by the FTC and the DOJ. If that potential is high enough, the FTC can sue to block the deal from moving forward–a very common scenario for companies looking to merge with, or buy out, other entities.
Feds Regularly Block Mergers & Acquisitions They Deem Potentially Harmful
In 1974, the U.S. Department of Justice brought suit against the telecommunications giant AT&T, alleging the company violated antitrust laws by monopolizing the American telecommunications industry, which prevented fair competition in the marketplace. AT&T was ultimately forced to rid itself of 2/3 of its business before the DOJ would allow the company to enter the computer business in 1982.
In January 2022, the FTC sued to block the proposed $4.4 billion acquisition of Aerojet, a manufacturer of rocket boosters, military warheads, and scrambling jets, by Lockheed Martin, the aerospace company that contracts with the U.S. Department of Defense and NASA. Following the FTC’s filing, both parties abandoned plans for the deal. In March 2023, the FTC took steps to block the merger of the largest provider in the U.S. of home mortgage loan origination systems, Intercontinental Exchange, Inc., and its top competitor, Black Knight, Inc. According to federal regulators reviewing details of the proposed merger, the deal would unfairly drive up costs for homebuyers and give lenders fewer choices in tools used to service home mortgages.
And in May 2023, the FTC sued to block a merger between two pharmaceutical companies. Both companies manufacture a drug for which there is no competition–one use to treat a serious disease of the eye, and one used to treat gout, a painful form of chronic arthritis. Regulators said the proposed deal would not only create a monopoly that could allow the new company to increase the price of the two drugs and to pressure health insurance companies to favor the two drugs.
Feds Would Almost Surely Block an Apple-Disney Buyout
The issue with Apple buying Disney, as it pertains to U.S. anti-trust laws, is not that The Walt Disney Company and Apple are entities within the same sector (except that both offer streaming services AppleTV+ and Disney+, respectively), but that both are huge companies and already have great power and control within the marketplace as separate entities. Because Apple is dominant in the technology sector, and Disney is a massive force in the entertainment sector, federal regulators would most likely immediately sue to block the deal, as explained by Saikrishna Marrivada with DigitalWisher:
It is highly unlikely that federal regulators would allow Apple to purchase Disney. Such an acquisition would likely raise significant antitrust concerns because both companies are major players in their respective industries. Apple is a dominant player in the technology industry, with a significant share of the market for smartphones, tablets, and computers. Disney, on the other hand, is a major player in the entertainment industry, with a significant share of the market for movies, television shows, theme parks, and other forms of entertainment.
If Apple were to acquire Disney, it would create a massive conglomerate with significant market power in both the technology and entertainment industries. This could potentially harm competition and lead to higher prices for consumers. As a result, federal regulators would likely scrutinize such a merger very closely and may even block it altogether if they determine that it would violate antitrust laws.
New $1 Trillion Firm Emerges to Buy Disney, But Anti-Trust Laws Still Apply
Recent changes at Disney, especially with regard to financial problems associated with ESPN, may very well be the lead-up to the acquisition of Disney–not by Apple, but by the Blackstone Group, a huge private equity firm that currently manages $1 trillion in mergers and acquisitions (M&A), with a majority shareholder named the Vanguard Group–the same majority shareholder of Walt Disney Company stock.
Chatter online and on television and cable news only mentions Apple as a possible buyer for Disney, but the Blackstone Group, like Apple, has the purchasing power to take on Disney and may have already taken a very close look at balance sheets and operations at the House of Mouse from the inside, as CEO Bob Iger recently brought on two former Disney execs with ties to Blackstone as consultants for the company.
And while the private equity firm buyout of Disney would look a bit different from a buyout by Apple or any other tech giant, U.S. anti-trust laws still apply, and as the Biden administration continues to crack down on potential deals with the help of the Federal Trade Commission and the DOJ, private equity firms have come under even more scrutiny, meaning a buyout of Disney may not be feasible, no matter who’s writing the check to Mickey.