Could MLB hit a home run for Apple and its stock?

Posted: 18 January 2022 8:37 pm
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Apple TV is reportedly bidding on a pro baseball weekday package, its first foray into live sports.

Apple (AAPL) is in serious talks with Major League Baseball (MLB) to carry sporting events on its TV offering, a new battle over content with Amazon (AMZN). Apple is looking to acquire the rights to the MLB’s weekday package that ESPN recently relinquished, according to the New York Post, which first reported on the matter.
In May 2021, ESPN and the MLB agreed to drop weekday games, which reportedly cut ESPN’s fee from $700 million per year to a reported $550 million annually. In a new deal that runs through 2028, ESPN retains exclusive rights to “Sunday Night Baseball,” the Home Run Derby and MLB playoff wild card games.
Tech companies are new players in this field, a genre that has long been dominated by ESPN, Fox Sports, NBC and CBS. The deal would be Apple’s first foray into live sports and would give the tech behemoth a big content boost for its streaming service, Apple TV+.
Other sports leagues have already partnered with tech companies to migrate live sports to streaming apps. In March 2021, Amazon and the National Football League (NFL) announced a 10-year agreement that made Amazon the exclusive broadcaster for 15 Thursday Night Football games per year in the US. Amazon is reportedly paying about $1 billion per year for the deal.

Apple to compete in live sports streaming wars

There’s a reason Apple is fighting for content rights with Amazon, Netflix and a growing number of digital streaming platforms. People are increasingly cutting cable for on-demand streaming services. A survey by The Trade Desk last year found that 27% of US households said they would be canceling their cable TV package by year’s end.
Sports fans in particular appear eager to make the switch. According to a recent study released by cloud video production suite Graybo, almost 80% of fans globally are ready to completely switch to streaming services for live sports.
Indeed, the live sports streaming business has seen significant growth and demand is expected to increase. A report from Verified Market Research projects the market will quadruple from $18.1 billion in 2020 to more than $87.3 billion by 2028.
Apple ended its fiscal 2021 fourth quarter with more than $190 billion in cash. The tech company could be ready to spend some of that cash on live sports content.
This deal alone won’t move Apple’s $3 trillion market cap. But the battle for content profits will be won one game at a time, just like a baseball season.

Can it move the stock?

Apple TV+ is part of a revenue stream that grossed $18.3 billion for the company in the fourth quarter of 2021 and $68.4 billion over the 12 months ended Sep. 25, 2021.
But the company hasn’t disclosed how much revenue its TV+ service generates individually. Apple’s services segment includes revenue generated from the App Store, Apple Music, Apple Arcade, Apple Pay, Apple Card, Apple TV+, Apple News+, Apple Fitness+, AppleCare+, iCloud, iTunes Store and more.
In Sep. 2021, CNBC reported that Apple claimed less than 20 million Apple TV+ subscriptions in the US and Canada as of July 1, 2021. The streaming service runs for $4.99 per month, which would put Apple TV+ revenue somewhere around $99.8 million at the time, a fraction of its overall service revenue.
MLB’s weekday package may not in and of itself be enough to move the stock, but it could be the springboard into the live sports streaming war that Apple needs.
At the time of publication, Matt Miczulski owned shares of AAPL.

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