Would Apple be interested in Netflix and deal?

Would Apple be interested in Netflix and deal?
It's a whole new world for Apple these days now that its number one product, the Apple iPhone, is struggling. Starting with the launch of the iPhone 3G in June 2008, Apple's smartphone would generate huge sales that would rise every year thanks to the large number of iPhone users who would upgrade to the latest model. But those days appear to be over. Apple CEO Tim Cook has acknowledged that Apple is being impacted by the longer upgrade cycle.

Possibly anticipating this, Apple has been focusing on its services unit. This is the second largest division inside Apple, and its most profitable. The company is trying to push revenue attributable to this sector to $50 billion by next year; in its latest earnings report released last week, Apple said that it had a quarterly record $10.9 billion of services revenue during the fiscal first quarter that ran from October through December. This unit includes Apple Pay, iTunes, AppleCare, Apple Music, the App Store and more.

According to CNBC, investment banking behemoth J.P. Morgan has a transaction in mind for Apple that could help it expand its services revenue greatly. J.P. Morgan's Samik Chatterjee told clients in a note disseminated today that the tech giant should purchase video streamer Netflix. Chatterjee says that it would be advantageous for Apple to buy the leading player in the industry instead of purchasing a smaller name (more on that below). He also notes that such an acquisition would help Apple's advertising revenue soar

Anytime Apple is mentioned in such a rumor, it is always pointed out that the largest sized transaction ever closed by Apple was its $3 billion purchase of Beats Audio in 2014. Tossing in a 20% premium, the J.P. Morgan analyst sees Apple having to pony up as much as $189 billion to buy Netflix. The company could self-finance this transaction considering that it has $250 billion in cash and cash equivalents at its disposal. However, obtaining some financing from banks or the public debt market would be a more prudent move.

Netflix would be easier for Apple to acquire than Amazon Prime or Hulu


Chatterjee says that Netflix would be a great fit for Apple since the tech giant likes to be an aggregator of content. In addition, as we pointed out, it would fit in with the company's focus on services revenue. The J.P. Morgan analyst also pointed out that Netflix would be easier to acquire than Amazon Prime, which is part of Amazon, and Hulu. While there has been talk about Apple starting up its own video streaming service, J.P. Morgan says that it is a lot easier for established players in the industry than for new content providers just starting up. Remember, Apple did buy Beats Audio to help it start Apple Music.


J.P. Morgan also says that Apple could benefit from buying game developers Activision or Blizzard. Another name that the firm suggests is Sonos. The company produces smart speakers and in-home speakers. Other names that are always mentioned when the talk turns to potential Apple takeover targets include Tesla and Disney.

Chatterjee admits that a Netflix acquisition by Apple is not likely to happen. The analyst says that "Netflix is unlikely to be a seller for a modest premium." Which means that if Apple is serious about buying Netflix, it might cost it $200 billion or more.

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28 Comments

1. cncrim

Posts: 1571; Member since: Aug 15, 2011

Depend if from investors yes but from consumer hello no. As soon as Apple accquire go through your monthly subscription garentee will go up 19.99 monthly.

25. Atechguy0

Posts: 918; Member since: Aug 03, 2018

Apple has a history of caring about Apple platforms first and foremost, and not giving a crap about anyone else or other platforms. Netflix and even Disney don't care about platforms. They support all, including every game console, and TVs. Ask yourself what Apple supports today. If you can answer that question honestly, then you know what I am saying is 100% correct. If Apple truly cares about services, then they should start showing that to the world, first. Try adding your iMessage to other platforms first Apple. Not to mention other services. I don't mean that token crap you call Apple Music.

2. cmdacos

Posts: 3873; Member since: Nov 01, 2016

Apple would kill the quality of content. Apple isn't even willing to shell out the bucks it takes to have quality shows on it's own planned service, they certainly aren't going to do with a built in user base. Plus the type of programming would decline significantly based on some of the targets apple has been pursuing. Oprah is a good example. It's not 1990.

5. BL4NKF4CE

Posts: 122; Member since: Aug 06, 2017

They must be spending some money on on quality shows to get people like Oprah, Jennifer Aniston, Reese Witherspoon, Steve Carell, Dr. Dre, Jimmy Iovine, Simon Kinberg, JJ Abrahms, Charlie Day, Kristen Wiig, Bryan Fuller, plus others for original content.

23. cmdacos

Posts: 3873; Member since: Nov 01, 2016

But they spend a fraction of what Netflix does so inherently if that behavior continued, quality on Netflix originals would decline. Especially because half the individuals above are not a draw.

3. Dr.Phil

Posts: 2293; Member since: Feb 14, 2011

The problem I have with all of this is that as of right now Netflix gives content creators A LOT of freedom in what they produce. I remember reading interviews with people that would work with the likes of Disney and they said Netflix is so much easier to work with in regards to how they create their work. I don’t see that continuing under Apple.

4. toukale

Posts: 611; Member since: Jun 10, 2015

Every few months some bankers pay someone to write how Apple should spend their billions so they can get a cut. Netflix has a ton of trash contents mix with a few decent to good contents. Apple spend $200+ billions on Netflix would be a waste of resources. They would be better off buying Disney. What netflix has going for it is its name brand than anything else. Paying that kind of cash for it is not worth it. It's the same arguments some do every year, about Apple buying Tesla (not worth it either). Every year we have to listen to those same bs arguments about Apple buying either Tesla or Netflix, which makes no sense whatsoever.

8. perry1234

Posts: 630; Member since: Aug 14, 2012

Agreed ! And $200 Billion is a huge risk. If it does not work out, they would have a flop purchase plus a $200 billion bill to clear. Would bring them a step closer to bankruptcy in case the plan backfires.

6. Vogue1985

Posts: 383; Member since: Jan 24, 2017

No thanks, we'll have to buy $100.00 per month if Apple is involved plus additional fees $20 for HD resolution, $20 for HD sound lol, $90 for family accounts etc. No thanks, seriously , KEEP Netflix Independent,But if they do, it's an easy move for me, There are so Many options available it bye bye. I don't want Tim 2 Cook my Flix on the Net.

7. notfair

Posts: 697; Member since: Jan 30, 2017

I will find then a different streaming service if apple buys netflix.

9. cjreyes666

Posts: 81; Member since: Oct 23, 2012

I hope Apple never buys any of the larger producers. I can see Apple having exclusives just for their own products.

10. Leo_MC

Posts: 6638; Member since: Dec 02, 2011

Never gonna happen, because Netflix has absolutely nothing that Apple would need to start and grow its own streaming service. The human mind (actors, directors, screenwriters etc) are there for the taking, it has the experience (Pixar), it already has contracts with big media groups (through iTunes, AM), it has the distribution (1+ billion users, extended by Samsung, lg, Sony TVs), a marketing team and, more important, it has $200+ B to support all of that.

11. Leo_MC

Posts: 6638; Member since: Dec 02, 2011

Minds*

24. Atechguy0

Posts: 918; Member since: Aug 03, 2018

Apple has an identity problem. Not to mention Apple has a history of caring about Apple platforms first and foremost, and not giving a crap about anyone else or other platforms. Netflix and even Disney don't care about platforms. They support all, including every game console, and TVs. Leo_MC ask yourself what Apple supports today? If you can answer that question honestly, then you know what I am saying is 100% correct. Apple buying any existing service, would mean they would initially lose customers from competing platforms.

27. Leo_MC

Posts: 6638; Member since: Dec 02, 2011

I don't know why would Apple - a pioneer, a disruptive company, a innovator - want to copy somebody else's business model - maybe it is too big, maybe it's harder to find something to innovate, I don't know - but they have no problem building any service from ground up. Apple is a hardware company at its core and over the years it has built services for its hardware (that's why OS X is Mac only); but, as it happens with Samsung, Sony, LG, it will have a hard time competing with Chinese companies, so the future is in the services and there MS, Amazon and Google (Tencent, Alibaba in China) are the undisputed kings. Apple moves in the best possible spot (I also see Google smelling the business opportunity - and I have a 3y business plans with my company to go there), so there's no problem with the identity, it's a problem for you, because you don't understand where the money is going to be tomorrow.

28. Blazers

Posts: 719; Member since: Dec 05, 2011

Why did you copy and paste the same thing in the same article?

16. IT-Engineer

Posts: 515; Member since: Feb 26, 2015

yup, keep telling yourself that buddy!

21. Leo_MC

Posts: 6638; Member since: Dec 02, 2011

Apple is not my company and I don't stream movies, because there are so much books I have to read. This is an opinion from a business perspective.

12. mootu

Posts: 1411; Member since: Mar 16, 2017

"The company could self-finance this transaction considering that it has $250 billion in cash and cash equivalents at its disposal" No Apple does not have $250 billion in cash, everyone loves to keep spinning this myth. Tim Cook himself states that Apple has $130 billion in net cash at the end of this quarter, check out the video below from 12.00 minutes. https://www.youtube.com/watch?v=qvR3PEPqX9A

14. midan

Posts: 2577; Member since: Oct 09, 2017

https://www.ccn.com/7-things-apple-buy-with-its-245-billion-cash-stockpile "However, Apple also disclosed that it has a staggering $245 billion in cash on hand, up almost $8 billion from the previous quarter." I think both are right, you are just mixing the info.

15. midan

Posts: 2577; Member since: Oct 09, 2017

you are talking about net cash.

17. mootu

Posts: 1411; Member since: Mar 16, 2017

I'm talking net cash (and so is Tim Cook) because Apple also runs a debt of over $90 billion (tax purposes) which cannot be included in available cash. Who you going to believe, CNN or Cook himself, i think Cook has a bit more info than CNN.

20. midan

Posts: 2577; Member since: Oct 09, 2017

Cook said both of those things, like i said both is right and this article isn't saying anything about net cash.

13. midan

Posts: 2577; Member since: Oct 09, 2017

I don't see where they would need netflix. Apple pros is that they have fresh content. Time will tell how good or bad is it. I've used many video services and usually i end them after first month when i have seen all the interesting stuff it has to offer. New interesting content coming very rarely, not worth of monthly subscription. Currently using two video services and already ended them before my free month is even ended.

19. SIGPRO

Posts: 2810; Member since: Oct 03, 2012

If fruit company buys Netflix i will cancel my subscription immediately! I have Netflix since day one!

22. ZerosAndOnes

Posts: 84; Member since: Oct 12, 2018

Hopefully it does not happen. Seeing how s**tty Apple music UI and app is compared to Spotify they would just ruin Netflix too.

26. sissy246

Posts: 7002; Member since: Mar 04, 2015

It would ruin Netflix They would change programs and raise the prices to high and lose customers.

* Some comments have been hidden, because they don't meet the discussions rules.

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