Apple plans to buy Netflix: Wants to dominate the streaming service market!

Wednesday, 03 Jan, 2018

And come 2018, we are hearing rumors of the service being bought by Apple! Like many multinational corporations, Apple avoided repatriating profits from outside the U.S.to avoid being taxed a second time.

Apple attributed about $252.3 billion of its $268.9 billion in cash and marketable securities to foreign subsidiaries in Q3 2017.

One of the hottest news of the day was Citi analysts predicting that there is a 40% chance that Apple will acquire Netflix. "This is a good problem to have", Business Insider quoted Suva and Merchant as saying.

Many in the industry are already aware of how Apple has struggled to plant a foothold in the movie and TV streaming business. According to reports from Asiya Merchant and Jim Suva, two notable analysts with the New York-headquartered bank, Apple may be in the market to purchase content producer and streamer Netflix. However, while Apple has tried to lure streaming customers with original content, viewers still flock to other services, like Netflix, Hulu and Amazon Prime Video. The iPhone maker's domestic cash pile is expected to become much larger because of that tax cut and a one-time tax repatriation holiday.

Apple plans to buy Netflix: Wants to dominate the streaming service market!
Apple plans to buy Netflix: Wants to dominate the streaming service market!

Suva and Merchant pointed out that Apple could acquire Netflix for only one-third of that amount.

Not only that, but the opportunity to repatriate money held in offshore accounts without paying a bunch of extra taxes means that Apple can bring the cash necessary for the purchase back into the States.

Apple is paying a lot of money for the privilege of going after Netflix. Whether Apple buys Netflix depends on how the company plans to invest newly freed-up revenue made available by the recent tax plan introduced by the Trump administration. The company is also developing its own scripted video series which will star Reese Witherspoon and Jennifer Aniston. This was based on his analysis of Apple's and Netflix's revenue, gross margin, operating expense ratio, other income and interest expense, tax rate and share count three years out from their last fiscal year.

He argued that the streaming firm is "actually being more judicious" about how much it spends on original content, contrary to the many headlines reporting that it's willing to spend $20 million per original TV episode.