While one is known for animated movies and theme parks, and the other for trolls and opinionated users, rumors of Disney’s interest in acquiring social media platform Twitter has had investors and analysts chirping throughout the last week.
Twitter’s interest in a buyout is nothing new. The social media titan has been on the lookout for a buyer for several months, and has fielded interest from companies like Salesforce, Google, and Microsoft. Speculation about these buyers’ interest in the company ramped up in recent weeks after Twitter hired Goldman Sachs to help navigate offers, causing a temporary surge in Twitter stock price. Bloomberg first broke the news of Disney’s serious interest on September 26th, reporting that the company is working with an unnamed financial adviser on evaluating the possibility for a bid.
Although some analysts say Disney is the most likely suitor to win over Twitter, others have hesitations, claiming the move would not be beneficial for a variety of reasons. New York Times technology reporter Farhad Manjoo highlighted a major hurdle in a recent column, explaining that if Disney owns Twitter, it could make it harder for competing media companies to provide content on the platform. Additionally, Manjoo says there’s an inherent brand mismatch between the two companies. “Disney is the happiest place on earth,” he says, “Twitter is for the worst people on the planet.”
Analysts’ pessimistic views of Twitter come from its underperformance on the stock market, which has left the company struggling to stay afloat. CNBC analysts project that Twitter’s revenue will continue to “decelerate” as investor interest wanes.
Yet, an investment from Disney could be a potential lifeline, giving the social media platform the resources needed to turn its performance around. On the surface, a bid from Disney also seems to fit the company’s recent investing strategy. Monness, Crespi, & Hardt analyst James Cakmak told Bloomberg that the buyout would make sense, as Disney is investing in technology, “and [Twitter] would give them the platform to reach audiences around the world.”
Even without a buyout, there has already been some overlap between the two media giants. Twitter recently took a step into ESPN’s territory with the release of their new sports streaming mobile app after winning livestreaming rights for NFL games over Facebook and other technology companies. Twitter also livestreamed the most recent presidential debate, and will stream the upcoming debates as well.
With these capabilities, many spectators think this match-up could be mutually beneficial. Disney’s vast content library partnered with Twitter’s digital prowess could equate to a content production and distribution powerhouse. Since Twitter’s average monthly user base is around 300 million people, it is also likely that Disney wouldn’t want to turn down an expanded audience reach, as it could give some signs of stability to uneasy investors. With these benefits in mind, it makes sense that a company based on generating content like clockwork would be interested in buying Twitter.
If Disney were to buy Twitter, it would not be the first media acquisition of its kind. The ill-fated AOL and Time Warner merger sixteen years ago was the result of a situation similar to Twitter’s current status, in which a tech company was looking for a media company to save it. With the failure of that merger, and the downward pressure on both Disney and Twitter’s stock prices, there is ample reason for investors to be wary. If Disney and Twitter don’t align plans for growth and financial performance should they combine, creating success might take more than a little pixie dust.
Lauren Shiplett contributed reporting.