Apple buying sports content 'the right move at [the] right time,' Wedbush says
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Apple (NASDAQ:AAPL) is reportedly in talks with Major League Baseball about broadcasting games on its Apple TV+ service, and if it should come to fruition, it would be considered a "major strategic move" for Apple, Wedbush Securities pointed out.
Analyst Dan Ives, who rates Apple (AAPL) outperform with a $200 price target, pointed out that the tech giant is going down a different path for content growth as opposed to just buying a movie studio and believes that live sports programming could be a "key potential" for success with the service in the future.
The package being discussed would allow a network or streaming service to show regular-season games on Mondays and Wednesdays that were not picked up by ESPN.
Pointing out that Amazon (NASDAQ:AMZN) has already spent $1 billion to air Thursday Night Football on its Prime service, a deal for Apple with live sports "will be a key linchpin to its streaming success along with original content as competition builds for live sports packages," Ives wrote in a note to investors.
Apple (AAPL) has had some notable successes with its streaming service, including TV shows "Ted Lasso," "The Morning Show," and movies like "Greyhound" and "CODA," but it lags the subscriber count of other services, such as Netflix (NASDAQ:NFLX), Disney+ (NYSE:DIS) and HBO Max (NYSE:T), with an estimated 20 million paid subscribers and 45 million around the world. By adding sports packages such as the MLB package, or others like college football, it should be a "shot across the bow" to other networks or streaming services that Apple is serious about live sports content to help drive growth for its service.
"Taking a step back, Apple TV+ is a small, but highly strategic component of the overall services ecosystem ($80 billion annual revenue in FY22) that is becoming a key monetization engine for the company over the coming years to tap its golden and unmatched installed base," Ives added.
Loop Capital recently raised its price target on Apple (AAPL) to $210, tying a Wall Street high, on near-term iPhone strength.