The Walt Disney Co., has been named as a potential suitor for Twitter, reportedly hiring financial advisers to evaluate the social media pioneer.
According to a Bloomberg report Disney joins Google and Salesforce.com as potential Twitter buyers.
Deal chatter around the social media company has heated up in recent weeks as its stock price has softened amid difficulties in attracting new customers and advertising revenue.
Twitter stock has risen sharply in the past few days as talk of a deal has increased. Last week Salesforce.com was reportedly eyeing a bid for the company, as well as Google parent Alphabet. That news sent the stock up about 3.3% (75 cents each) to $23.37 on Monday.
Twitter stock rose 21% last week on the news it had drawn interest from Google – it closed at $22.62 per share on Sept.23 up from $18.63 the day before. Even with Monday rise the stock is still far below the $30 level it traded at last October.
While Google is apparently intrigued most by Twitter’s search engine synergies -- Disney is said to be most interested in Twitter’s potential as a news vehicle for its ESPN and ABC News properties. The two companies also know each other well – Twitter founder and CEO Jack Dorsey is a member of Disney’s board of directors.
In a research note, Pivotal Research Group senior research analyst – advertising Brian Wieser wrote that the benefit of a Twitter deal for Disney depends on how the social media business fits into the larger media conglomerate.
“We can see a clear advantage to ABC’s News division and to ESPN as a platform to deliver real-time news and sports-related content,” Wieser wrote, adding that at industry conferences, Dorsey has shown that Twitter could fit well into a news gathering organization.
But Wieser warned that could discourage competitors like Fox News, CNN, NBC and CBS from using the platform in favor of Facebook or another medium, which could lead to fewer users for Twitter.
“However, we can imagine how usage could hold up or even improve if managed well, meaning that an acquisition could still make sense even if many of its contributors relied on the platform less in the future,” Wieser wrote.
Disney has been under pressure as its core cable network customers have declined in recent years as skinny bundles and over-the-top services have eaten into pay TV customer rolls. The company has made some recent acquisitions aimed at bolstering its OTT presence – it purchased a minority interest in BAMTech in August, with the idea of launching a direct-to-consumer offering for ESPN next year.
Twitter could be a big morsel for Disney to swallow – with a market cap of about $16 billion, Twitter would be Disney’s largest purchase since its $19 bilion merger with CapCities/ABC in 1996, according to Bloomberg.
Disney shareholders didn’t seem too enamored with the possibility of a Twitter merger, driving the stock down 1.4$ ($1.31 each) to $91.96 per share.