Apple to Buy Netflix: Will Investors Take it Positively?

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Apple to Buy Netflix: Will Investors Take it Positively?

According to Business Insider and numerous other media outlets, Citi analyst Jim Suva argued this week that there is a 40% probability of Apple buying Netflix, thanks in part to President Trump's corporate tax cut.

"The firm has too much cash - almost $US250 billion - growing at $US50 billion a year". 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. As such, this new tax reform might allow the company to put the cash to good use.

Netflix stock was up by 4.56 percent on Tuesday after Macquarie Research recommended the shares, and after Citi analysts said there was a 40 percent likelihood Apple could acquire the streaming service company. 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).

It's estimated that Apple would only need a third of that to buy Netflix. This note was penned before Disney bought Fox's studio and TV assets, but before that the likely hood of Apple buying Disney was in the 20 to 30% range. Now that we know that such a deal can happen, the question is, will it? In the US, Netflix now has more subscribers than cable TV. Coming to Netflix, they are expected to spend more than $6 billion in 2017. By purchasing Netflix, Apple could jump start its streaming efforts in a really major way. Apple has started creating original content for Apple TV, partnering with Jennifer Aniston and Reese Witherspoon on a new show.

It was reported past year that it planned to rent California's Culver Studios for the shooting of original TV shows and movies, as it has plans to invest up to $1 billion in TV and movie productions.

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.

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