Take all of this with as many grains of salt as you need, because for the time being it’s mostly rumour and speculation. But the planets do seem to be aligning, and the iron could be sufficiently hot enough to strike. It’s wild to think about, but there’s an increasingly good chance that Apple might be seeking to purchase and acquire Netflix.
In the wake of the gargantuan Fox-to-Disney sale, the company that securely houses the awful ghost of Steve Jobs is being tipped to make a play to buy the streaming giant, and it’s thanks in large part to President Donald Trump.
Stay with us on this one.
Citi analysts have rated Apple a 40% chance to buy out Netflix, due to a large cut in corporate taxes that the Trump administration just pushed through.
For eons, Apple has kept huge amounts of cash reserves offshore – about 90% of their cash is held in overseas territories. This is because, previously, they would’ve incurred a massive tax hit had they attempted to repatriate the money back into the United States.
The Trump-backed corporate tax cuts (which are, to borrow a phrase, yuge), include a one-time provision that allows companies to repatriate overseas money without taking the giant tax hit.
This provision means that Apple will suddenly have somewhere around US$220billion burning a hole in their American pockets; cash previously held overseas that they will need to use somewhere.
Apple’s cash accumulation is currently increasing at a rate of around US$50billion per year, so that sudden influx of walkin’-around money has gotta go somewhere. And that somewhere is strongly tipped to be Netflix.
Apple has tried getting themselves into the original content game previously, shoving around US$1billion towards creating original scripted content for iTunes. But by and large, consumers have turned away from the platform as a video-based delivery service in favour of Netflix.
The price tag to acquire Netflix is, as you’d imagine, bloody spenno. But it would barely make a dent in that giant, Scrooge McDuck-style vat of gold that Apple will soon be holding. Experts put the cost of acquiring Netflix at around a third of their cash reserves, or about US$75billion.
This, it should be noted, would represent a fairly significant shift in company policy, given that Apple’s largest-ever acquisition was Beats, which they purchased for just US$3billion in 2014. For a company that prefers everything to be in-house or proprietary, absorbing an already-giant company would be a big shift in philosophy.
For what it’s worth, Forbes insists that such an acquisition is highly doubtful and is the product of Citi analysts hedging their bets on a big call.
Still, it’s an interesting concept to think about. Whether or not anything becomes of it is, at this stage, anyone’s guess.
