The Internet is a wonderful place.
It is a epicenter of viral content, even if said is nothing more than speculation. When it comes to a lightning rod, Elon Musk epitomizes that.
Which is probably why some rumors are flying about him buying Disney.
Before getting into this idea, I must state a couple things:
- I have no idea how realistic this is. We are dealing with rumors on the Internet so we have to take it with a grain of salt.
- Many will frame this as a "political" move when it might have nothing to do with that.
When this came out, it was easy to laugh off. However, as I thought about it, this makes a ton of sense.
Elon Buying Disney Would Be The Smartest Move In The World
Elon Musk should buy Disney if possible.
It is really that simple. This would guarantee that Musk would become the first trillion dollar man. He would end up crushing his competition.
Why do I say this?
The acquisition of Disney would put one of the deepest Hollywood libraries in the hands of Musk. He would instantly be able to do what Disney cannot.
Do you see where this is going? If not, it will become clear in a few moments.
Disney Is A Failure
Disney is turning into a complete failure. Again, we are not talking politics although that seems to be going against them.
Instead we are talking about then becoming a digital platform that is able to compete in the new environment. There is little doubt that as a traditional broadcaster, Disney was top of the charts. ESPN dominated sports programming for decades. The broadcast properties the company owns are some of the biggest names in television. Of course, as a movie studio, Disney probably owns the most valuable library.
With all that going for them, how can I say they are a failure?
Simple. They are.
ESPN is rapidly going into the toilet. The latest idea is to basically merge that with Fox Sports and Warner Bros in an effort to fend off the demise of the cable package.
CEO Bob Iger said the company is looking to possible sell its traditional broadcast stations, i.e. ABC.
The last 18 months were horrific for Disney regarding their box office. They lost close to a billion dollars last year on their movies. Unfortunately, 2024 is not shaping up to be any different. In fact, the company is cancelling projects, writing off the sunken costs, as opposed to completing them and watching them fail. After all, at least this saves on the marketing budget.
Finally, Disney is $11 billion in losses into their streaming service.
All of this adds up to failure. Sadly, for the mouse, things are getting no better.
Musk Would Turn A Profit
Musk buying Disney would generate hundreds of billions in value. He has the ability to implement a proven model.
In the past we discussed what I consider to be the most successful digital company: Amazon. Musk simply would need to follow that model and reap the benefits.
How would he do that?
To start, the value of X would instantly jump to over $100 billion. Those who thought he was foolish for buying it would quickly have to reverse course.
It is estimated that X has around 500 million monthly active users. Disney+, the streaming service, peaked at 164 million subscribers before pulling back. It is now below 150 million users.
The pricing is all over the place since there are different packages, including the streaming of Hulu (another Disney property..mostly). Whatever the average price, Musk could instantly turn this into a money maker.
Following the Amazon model, the Disney library could be included as a service offered by Twitter. It likely would be integrated right into the application. This provides the organization with another powerful property.
Consider what we have now:
Twitter Blue is around $8 per month. The premium version which I understand also include Grok is around $25. There might be other features built in but the point is clear: we have a tiered system.
What happens if Disney/Hulu programming is also included into the services offered? Perhaps there is a middle package for around $15.
Instead of losing billions on streaming which Disney is doing, X would likely be profitable instantly. This becomes a value add. How many people would grab the package if it included Disney?
The key would be acquisition costs. Since there are already half a billion people using X each month, it is simply a matter of targeting them to get the service.
Disney has a market capitalization of $182 billion. This is a healthy sum to come up with. However, the hit could be negated somewhere by selling some of the assets off. For example, the broadcast stations could still put on the block. The same could be true for the theme parks and hotels. X would have no need for them.
Building Powerful Subscriptions
As stated, Amazon is the poster child for building a digital platform and continually driving more value to it.
The advantage X has it the fact it is a social media network. This means the user base is there. At the same time, in the United States, the company is filing to become a money transfer service. This is going to put it in the same category as PayPal.
Adding Disney programming to the monthly service would be a windfall for the users. At that point, it would only require a sensible pricing package to make it a major success.
Of course, purchase price plays a large role in the viability of this.
Whether Disney is the company that ends up being purchased is up for debate. However, the concept means that Musk is likely to follow this strategy at some point. He is not going to be outdone by Amazon, Google or Facebook. Google is already in the game with its YouTube television service.
As stated in the past, when you ask most companies what business they are in, there is one you can point to. With technology companies, the answer is any business they want.
The digital platforms are going to eat most industries. Amazon is showing the design and others are going to follow.
By the end of this decade it is likely the majority of broadcast and media entities will have been swallowed up by the digital platforms. They simply cannot compete.
Elon is likely well aware of this scenario. Adding a library like Disney can only enhance the subscription model X is offering.
If it isn't Disney, I predict something else will be the target. A social media platform without a library in the future will not be in business.
This is something for proponents of Web 3.0 to remember.