Verizon buying Disney is far-fetched, expensive, analysts say

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Analysts were quick to sound off on the unlikelihood of a Verizon-Disney deal after the New York Post circulated a rumor over the weekend.

A rumor that Verizon was considering buying Disney circulated over the holiday weekend, but analysts have been quick to pick apart the likelihood of such a deal.

The New York Post reported on Saturday that Verizon should not be counted out as a potential suitor for Disney, citing a “well-placed banker.”

While a deal for Disney would help Verizon keep pace with competitor AT&T, which is pursuing an $85 billion deal to buy Time Warner, some analysts said to take the report with a grain of salt.

RBC Capital Markets analyst Steven Cahall said on Monday that the reported deal has a low probability of panning out.

"Though not fake news, we think the Post's burden of legitimacy for publishing such ideas is below that of publications like the WSJ, Reuters and Bloomberg. But to its credit, we note that it occasionally gets these M&A calls right," Cahall said in a research note.

Wells Fargo Securities LLC analyst Marci Ryvicker was less judicious in her response to the rumor, telling Light Reading that Wells Fargo does not believe Verizon is thinking about buying Disney and said the Post may have confused the Fourth of July with April Fools.

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For Verizon, it may be too soon to begin considering another acquisition, especially one for a company as big as Disney, which currently has its market cap hovering around $168 billion. Verizon recently wrapped up its purchase of Yahoo and is now integrating it with AOL and forming a combined company called Oath.

As The Street points out, Verizon is still dealing with the $130 million in debt it took on when it bought Vodafone outright.

But if Verizon did decide to go after Disney, it may have a clearer path to a deal if other major contenders for Disney like Apple are indeed backing off.

BTIG analyst Rich Greenfield debunked rumors that Apple was considering buying Disney as a way of accelerating its content creation business and getting hold of valuable IP. But with Apple’s recent hiring of two former Sony Pictures Television executives to run its original programming efforts, Greenfield said that Apple appears to now be forging a more organic path into the online video industry.

“It now appears Apple is preparing to accelerate video content creation on its own,” Greenfield wrote.

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