Last month, Disney bought Fox after weeks of rumors. They also announced a few months prior to tha that they would not be extending their deal with Netflix, and would instead launch their own streaming service.
But that was 2017. This is 2018. And guess what, there could be another deal that could affect the way you watch your shows. Don’t worry, Disney isn’t making another major acquisition. At least not yet. No, reports are saying that Apple is expressing interest in making a deal to buy Netflix. More on the story below.
Nothing is definite just yet. But Business Insider says there is a 40% chance that this will happen. Not exactly strong numbers, but look at what it took for Disney to acquire Fox’s entertainment assets. First, the deal was on, then it was off, then it was back on again.
Apple has expressed interest in making its own content, but how they would they distribute that content is unclear. Buying Netflix would solve that problem easily. According to the report, Apple has $252 billion in cash, but most of it is in foreign jurisdictions and they were unable to transfer it to the US. Now, thanks to the Trump tax cut, they’ll be able to bring about $220 billion in cash to the US. In their estimates, it would take approximately one-third of that for Apple to buy Netflix.
According to Citi analysts Jim Suva and Asiya Merchant:
“The firm has too much cash – nearly $250 billion – growing at $50 billion a year. This is a good problem to have. Historically, Apple has avoided repatriating cash to the US to avoid high taxation. As such, tax reform may allow Apple to put this cash to use. With over 90% of its cash sitting overseas, a one-time 10% repatriation tax would give Apple $220 billion for M&A or buybacks.”
While deals like this are announced, the likelihood of it happening is still low. Forbes says we should take this news with some reservations. If you have been paying attention to some of Apple’s smaller acquisitions, like Beats or Shazam (the music recognition app), you would see that they came at a much smaller price tag than that of the $250 billion that Citi analysts are suggesting.
Here’s what a report at Forbes had to say:
“Apple has already committed $1 billion towards creating new shows and their largest acquisition was buying Beats for $3 billion in 2014. Why would they spend $75 billion to buy Netflix? It would be a desperation move that would raise a white flag and signal a major organizational shift in philosophy.”
Forbes adds that Citi has nothing to lose by making such a prediction, and can spin things if it doesn’t go in their favor.
[Source: Business Insider l Forbes]
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