“Given Apple’s $233 billion cash stockpile and the growing competition for video content, speculation linking the company to Netflix or Time Warner seems only natural,” Chris Nolter reports for TheStreet. “Shares of the companies, especially Netflix, surged on Thursday after the Financial Times reported talks between Apple and Time Warner and suggested that Apple CEO Tim Cook should take a look at Netflix.”
“Such potentially expensive deals don’t match up with Apple’s M&A history and strategy, however. For starters, Apple has not bought big companies in the past and Reed Hastings’ streaming service has a market cap well above $40 billion,” Nolter reports. “‘If Apple launched this service and gave it way for free for a year how many defectors would Netflix have?’ Moody’s Investors Service analyst Gerald Granovsky said. ‘That would cost less than $40 billion.'”
“While the valuation of Netflix dwarfs the price tag for Beats, Christian Renaud of research firm 451 Research said that isn’t the only potential snag to a deal,” Nolter reports. “Much of Apple’s cash is overseas, Renaud said, and would be taxed if repatriated for purchase. It would also be cheaper for the company to raise debt for a purchase. ‘I’s unlikely,’ Renaud said of an Apple-Netflix combination. ‘It’s not impossible… Tim’s gotten a lot of criticism for not really moving the needle and being as disruptive as Jobs was. Maybe his way to fix that is to buy his way out of the problem. You never know.'”
Read more in the full article here.
MacDailyNews Take: What is unique about Netflix? A handful of TV series are not worth $40 billion. Apple is perfectly capable of taking on Netflix without having to buy them, deal with integrating their employees, etc.
Until Apple actually buys Netflix, we’ll keep saying that Apple will buy Netflix for the same reason they bought Palm.
Should Apple buy Netflix for $53 billion? – May 10, 2016
Why Apple should buy Netflix – January 7, 2016
Apple’s move into content creation could devastate Netflix and Amazon – September 1, 2015
Why Apple should buy Netflix – April 21, 2015
Why Apple should buy Netflix – March 26, 2014
Jim Cramer: Apple should buy Twitter or Netflix to spur growth – February 7, 2013
The Netflix buyout battle: Apple vs. Time Warner – April 10, 2012