Citi Analysts Predict Apple Buyout of Netflix

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While most of software and hardware giant Apple’s greatest innovations represent long-developed internal endeavours, the company is no stranger to acquiring outside talent whole-cloth. The company ended 2017 with the purchase of Shazam, a popular music app capable of identifying songs after receiving a quick soundbite. That purchase aside, the company’s other acquisitions have been relatively low profile, with the likes of Beddit, BookLamp, and other mergers flying under the radar.

While nothing is set in stone, Apple may be making one of its highest profile acquisitions in the new year, at least according to two Citibank analysts. 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. 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.

According to Suva and Merchant, the likelihood of Apple making the purchase this year is around 40 percent. The company has roughly $250 billion locked in foreign markets, but the newly passed Trump tax plan enables businesses to make a one-time repatriation of overseas funds, which would give the company more than enough to fund the merger. After taxes, Apple would bring roughly $220 billion, with that sum growing about $50 billion each year. Merchant and Suva also see Disney and Tesla as potential candidates for a merger with Apple, though these are far less likely than a deal with Netflix.

While services like Hulu, Amazon Prime, and Netflix have evolved to develop their own content and continue to draw in millions of users, Apple’s own iTunes platform, while succeeded as an app, hasn’t grown as a means to deliver content. This is especially true of video, though the company has announced efforts to penetrate that market in recent months. In November of 2017 Apple revealed its first effort into scripted series by announcing two projects, with one revealed to star Hollywood luminaries Reese Witherspoon and Jennifer Aniston.

Even with some star power behind their project, it’s unlikely that these scripts will be enough to approach the dominance of other streaming services, hence the Netflix merger remains a distinct possibility. Suva and Merchant estimate the deal would cost the company about a third of the cash freed up by Trump’s tax plan, leaving Apple with plenty of assets to develop further content for the platform should they acquire it.

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