Apple has flirted with Hollywood before: analysis

SAN FRANCISCO — Apple's dalliance with Hollywood and rumors of a studio play have circulated even before Toy Story hit the big screen in 1995.

A report Thursday that Apple considered a bid for Time Warner, owner of Warner Bros., HBO and other media properties, should not come as a surprise. The Financial Times, citing unnamed sources, said Apple exec Eddy Cue broached a deal with Olaf Olafsson, head of corporate strategy at Time Warner. The talks were preliminary, however, and did not involve Apple CEO Tim Cook or Time Warner CEO Jeff Bewkes, the report said.

Apple and Time Warner declined to comment on the FT report.

Like a glowing ember, the news has repeatedly surfaced, said Richard Greenfield, media analyst at BTIG Research.

Flash back to late last year, when Variety reported Apple held exploratory talks with Hollywood executives about creating its own original programming. In March 2015, the Wall Street Journal reported Apple was in talks with CBS, ABC, Fox and other broadcasters to offer a TV bundle in the fall available via Apple TV.

Had the Time Warner talks escalated and reached fruition, it could have led to exclusive, original content for an Apple entertainment service, Edward Jones analyst Bill Kreher said in an interview Friday.

Sense a trend?

Rumors of Apple's fascination with the entertainment industry stretch back at least two decades to Steve Jobs' stewardship of Pixar Animation Studios, the computer-animation film studio that was once a piece of Lucasfilm. Toy Story, the first film from Pixar, was not only a mega-hit but a cultural touchstone.

Jobs, who concurrently ran Apple and Pixar for several years, made no secret for his love of enduring, family-oriented entertainment content during a 1996 interview while I was a tech reporter at the San Francisco Chronicle. When asked to name his favorite brands, he answered, without hesitation, Disney, Lucasfilm and Sony.

"When you make a Fantasia (1940), people remember it from generation to generation," Jobs said in an interview at KQED studios in San Francisco. "You make a personal computer, and it's obsolete in six months to a year."

"Classics are timeless," he said.

Pixar in many ways redefined — perhaps surpassed — the Disney model for critically- and commercially-acclaimed content for all ages. Disney thought so much of Pixar, it bought it for $7.4 billion in 2006, making Jobs the largest Disney shareholder at the time. Jobs had it both ways: Influence in making films that resonated for decades while overseeing the product lineup at Apple.

Today, the creation and distribution of content — video or music — in the digital age is critical to Apple's future. Whether through AppleTV, iPhone, iPad, MacBook, iPod Touch or Apple Watch, a subscription service leveraging the content of a studio could mean potential billions of dollars in sales and a more diverse product portfolio.

A corporate marriage of Apple and HBO, for example, could lead to the creation of an unprecedented library of content across programming for sports, news, film and kids via Apple's digital ecosystem, more than 1 billion iOS devices, Apple Stores and cable television.

Apple has made this bet before — a $3.2 billion acquisition of Beats Electronics in 2014 — with mixed results. The accord led to the creation of Apple Music, the second-largest service of its kind, behind Spotify's 30 million paid subscribers. But with 13 million paid subscribers, the nearly 1-year-old service has fallen short of the lofty expectations of analysts.