J.P. Morgan: Apple should buy Netflix, but it would likely cost at least $189 billion

“Apple has a pile of nearly $250 billion in cash and one of the ways J.P. Morgan thinks the tech giant could use it is by acquiring Netflix, to boost Apple’s position as a video content creator,” Michael Sheetz writes for CNBC.

“”We think Netflix is best strategic fit on leading position in engagement level as well as original content, differentiating itself from pure aggregators of content,” J.P. Morgan analyst Samik Chatterjee said on Monday,” Sheetz writes. “‘We believe there is value to acquiring the most successful player in this space, which is hard to replicate with a smaller player in this market,’ [Chatterjee said].”

“Chatterjee notes that the purchase would likely command a sizable premium. If that premium was 20 percent, it would likely cost Apple $189 billion, the analyst speculates,” Sheetz writes. “The note from Chatterjee outlines three industries the firm thinks would be a good fit for Apple to make strategic acquisitions and names three firms the company should buy: Netflix, Activision Blizzard and Sonos.”

Read more in the full article here.

MacDailyNews Take: Nope.

Until Apple actually buys Netflix, we’ll keep saying that Apple will buy Netflix for the same reason they bought Palm. — MacDailyNews, January 31, 2016

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. — MacDailyNews, May 27, 2016

11 Comments

  1. $200 billion buys a lot of content. Apple has the user base, brand, and plenty of mechanisms to put a streaming video offering in front of an enormous audience.

    Apple can become the world’s dominant film and television provider if they get serious about it. (And it does seem they’re going that way.)

  2. Why are people so obsessed with this idea? I don’t see it happening. It’s not like Netflix owns most of its content anyway so what good would buying Netflix do

  3. 189B, that’s about one quarter Apple’s Market cap

    and Netflix if you minus expenses loses money.
    (it only shows a profit by accounting magic putting expenses into the future, debt financing )

    It has negative cash flow.

    (i.e buy Netflix for 189b And lose money)
    and we don’t even want to talk about Netflix’s stupid P.E vs Apple’s…

    Investopedia:
    “Lets start with a basic fact: Netflix’s highest ever cash flow (or the amount of money Netflix generates from its normal business operations minus what it spends on large projects) is $279 million. That was in 2009 before the company expanded globally. By 2012, Netflix dipped into a negative cash flow that has only gotten worse. In 2017, the cash flow was around $-2.01 billion, and by 2018, its expected to hit $-2.79 billion.”

    NTY OCT 2018
    “Netflix’s cash-flow statement indicates that in the 12 months through September, it spent $11.7 billion on new content. But its income statement indicates that total revenues were $14.9 billion, leaving it only about $3.2 billion to pay for marketing and the rest of its operations. That wasn’t enough to run the business, so the company has borrowed money.

    On Monday, Netflix announced that it intended to borrow more, by selling $2 billion worth of bonds, which rating agencies say is below investment-grade. That comes on top of $8.3 billion in speculative-grade debt already on its balance sheet. The borrowing is likely to continue to grow as long as the company burns cash faster than its millions of subscribers send in money.”

  4. Netflix is this generation’s BlockBuster. Read financial news and you can see it is spending way more than it takes in. Hopefully, Apple won’t waste the money.

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