Apparently, There's A Good Chance Apple Could Acquire Netflix

Cesar Mills
January 3, 2018

Citi analysts Jim Suva and Asiya Merchant were quoted saying, "Historically, Apple has avoided repatriating cash to the USA to avoid high taxation".

After taxes, Apple would bring roughly $220 billion, with that sum growing about $50 billion each year. Apple is said to have as much as $250 billion dollars at its disposal, and Suva and Merchant figure that it would need only a third of that hoard to buy up Netflix. Like many multinational corporations, Apple avoided repatriating profits from outside the U.S.to avoid being taxed a second time. As such, this new tax reform might allow the company to put the cash to good use. Apple, which is sitting on a massive cash pile of $252 billion that is mostly outside the USA, would need to spend only a third of that cash to buy Netflix.

Apart from Netflix, the analysts say there is a smaller chance (10%) of Apple looking at acquiring video game companies such as Activision, Electronic Arts, and Take-Two. In addition to them potentially controlling more than one-quarter of the film industry, Disney would also have pretty much acquired a good chunk of content to be utilized in whatever streaming service they developed (oh yeah, and should the deal go through, they'd own 60 percent of Hulu as well). However, the question here is, despite the huge cash reserves, does it make sense for Apple to buy Netflix?

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The corporate tax cut is accompanied by a one-time allowance to repatriate cash stored overseas without a major tax liability. Acquiring Netflix will instantly give it a dominant position in the market. Now that we know that such a deal can happen, the question is, will it? The company is also working on its first scripted series with Jennifer Aniston and Reese Witherspoon.

Analysts reckon there's a 40% chance that Apple could buy Netflix due to a corporate tax cut granted by US President Trump.

Reports from September even suggested that Apple might lease the Culver Studios in California as part of a broader plan to invest $1 billion into TV and movie productions. Heads turned when Netflix announced that it would devote $7 billion to $8 billion to content in 2018, but it might still be shocking to hear that Netflix is going to release 80 original movies in 2018.

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