Citi Analysts Predict Apple Buyout of Netflix

Citi Analysts Predict Apple Buyout of Netflix

Citi Analysts Predict Apple Buyout of Netflix

The analysts said Apple has far too much cash at close to $250 billion and it grows annually by about $50 billion. "This is a good problem to have", Suva and Merchant told clients according to Business Insider.

The Trump tax cuts will enable Apple to repatriate the cash holdings, while incurring only a small tax hit on the repatriation.

Not only that, but the opportunity to repatriate money held in offshore accounts without paying a bunch of extra taxes means that Apple can bring the cash necessary for the purchase back into the States. Apple, which is sitting on a massive cash pile of $252 billion that is mostly outside the US, would need to spend only a third of that cash to buy Netflix.

There is a 40% chance that Apple will acquire Netflix, according to a new report from Citi. Tesla is listed at around 5% likelihood.

If Apple were to buy Netflix it could spark a tech giant arms race, with the likes of Amazon and Google both looking for ways to shore up Amazon Prime Video and YouTube repetitively to fend off any extra competition Netflix can levy with Apple's help and the iOS ecosystem.

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The corporate tax cut is accompanied by a one-time allowance to repatriate cash stored overseas without a major tax liability.

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. So perhaps there is something to an Apple acquisition of Netflix.

Apple's struggle to establish itself as a key player in internet broadcasting, despite launching Apple TV and working on numerous TV shows, is well documented. If this acquisition happens then Apple will be the world's leading internet television with more than 90 million members in 190 countries. While Apple does offer a vast catalogue of video and music content on iTunes, there is no denying the fact that streaming services such as Netflix are much more popular. Apple wants to change that and is already working on creating more original shows.

Wall Street Journal points out that HBO spent about $2 billion on content last year, while Amazon spent around $1 billion in 2013 alone, the year it started original programming. Nollen believes Netflix can save money by spending less on licensed content.

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