News is circulating around the video streaming world as the New Year begins as speculation grows that Apple; the Cupertino, California based tech behemoth might be preparing to acquire Netflix the streaming giant.
According to analysts at Citi, there is a 40% chance Apple would buy Netflix. Apple’s possible mergers and acquisitions were given a ranking by two of Citi’s analysts in a presentation it shared with its clients, which highlighted Netflix as a possible purchase.
The Citi note was written before the announcement made by Disney of its deal of $52 billion to buy 21 Century Fox. The note mentioned a 20% to 30% likelihood of a partnership between Apple and Disney, and a 40% potential of a deal between Apple and Netflix.
A bid by Apple to acquire Netflix will rest upon an ability to bring its surplus cash from overseas back into the U.S. following the tax cut that was approved in Congress. A cut in the corporate taxes, together with a one-off allowance for businesses to bring cash back from overseas without facing a major tax bill, will have Apple full of cash in the amount of $252 billion.
The analysts said Apple has far too much cash at close to $250 billion and it grows annually by about $50 billion. This problem is a good one to have, said the analysts and Apple has historically avoided repatriating cash to avoid the high taxes. As such, this new tax reform might allow the company to put the cash to good use.
With more than 90% of all its available cash overseas, a one-off 10% repatriation tax would net Apple about $220 million for buybacks or mergers and acquisitions.
Already, Apple is planning a big entrance into streaming with original content. It reportedly has backed a Steven Spielberg anthology series and a drama series, not yet titled, starting Jennifer Aniston and Reese Witherspoon.
In August, a report said that Apple was planning to spend approximately $1 billion to create its own streaming content for customers. The streaming slate from Apple is reportedly conservative, focusing on content that is family friendly.
There is no indication as well of where Apple is planning to showcase the original streaming content, but rumors point towards a new updated and changed platform on Apple Music which would offer both Apple’s originally produced television shows, movies and music.