Right now, we are on the heels of one of the announcement biggest business deals in the history of the film industry. After weeks of speculation, Disney announced that they would be acquiring most of 21st Century Fox.
The ramifications of this move is huge. 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).
Well, those aren’t the only potential seismic changes going on here. According to Business Insider, there is a 40 percent chance that tech giant Apple could acquire Netflix, the streaming service that has recently doubled down on creating original TV programming and feature films. This news comes from Citi analysts Jim Suva and Asiya Merchant.
The reason being cited is the corporate tax cut that U.S. President Trump just had passed. Apple currently has a reported $252 billion in cash, though a lot of it isn’t in the U.S. As laws stand before the tax deal, the cash would be required to get taxed in order to bring that money back in to the U.S. However with this new deal, companies get a one-time allowance to bring in cash stored overseas without taking that major tax hit.
“The firm has too much cash – nearly $250 billion – growing at $50 billion a year. This is a good problem to have,” Suva and Merchant told clients. “Historically, Apple has avoided repatriating cash to the US to avoid high taxation. As such, tax reform may allow Apple to put this cash to use. With over 90% of its cash sitting overseas, a one-time 10% repatriation tax would give Apple $220 billion for M&A or buybacks.”
In short, Apple will have more money to potentially invest, and Netflix was marked as the company they are most likely to buy.
While Apple has tried their hand at some limited original content, they’ve largely made a killing off their iTunes store, where viewers can rent and buy digital movies produced by the studios and networks. However, as time has gone on, audiences have increasingly turned to streaming services like Netflix or Hulu for their fixes.
Acquiring Netflix would really allow them to get a bigger chunk of the original content and streaming pie than would otherwise be possible.
What do you think? Would you want to see Apple buy Netflix? Let us know why or why not down below!
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SOURCE: Business Insider