Despite Apple following the path of what made Netflix so globally popular — creating exclusive original content — analysts from JP Morgan are still advocating for an acquisition to be made. According to the bank, Apple should use its nearly $250 billion in cash to either purchase Netflix, Sonos or Activision Blizzard outright. As for a full takeover of Netflix, the bank estimates it would take at least $189 billion to be completed.
Bank analyst Samik Chatterjee said in a note, via CNBC:
We think Netflix is best strategic fit on leading position in engagement level as well as original content, differentiating itself from pure aggregators of content. We believe there is value to acquiring the most successful player in this space, which is hard to replicate with a smaller player in this market.
The $189 billion figure comes with some ‘Apple premium’ tacked on, as the video platform’s market value stands at under $150 billion, not including its some $7 billion in debt. The bank believes that if Netflix were to come to terms with an agreement with Apple, an extra 20 or so billion would be added on to the final sale price.
Chatterjee continued in the note, with concerns Apple might struggle to grow the platform organically.
Video streaming, including original video content, is a highly competitive market with established traditional media houses as well new entrants fighting aggressively for incremental subscribers, which is likely to make it difficult to scale any new platform to compete effectively
Finally, the bank believes acquiring Netflix would expedite Apple’s expansion into advertising, saying:
An acquisition of Netflix could help Apple drive consumers faster to their gateway app, which is serving as an aggregator of content and multiple subscriptions, and could enhance the opportunity around potential advertising revenues in the future.
Days ago, analyst Katy Huberty from Morgan Stanley echoed bank claims that Apple could see a $1 trillion valuation again should the company decide to launch a “media bundle” subscription service in 2019, comprised of television, music and news.
Interestingly, there hasn’t been much talk of Apple including books into the rumored media bundle. However, with Amazon’s Kindle being directly integrated with Prime, the inclusion of some free literature might be in order.
As for just the mere mention of Sonos in the investors note, shares of the audio manufacture subsequently shot up, jumping from $10.80 to over $13 each over the past week.
Sonos stock over the previous five days.
As for the mention of Activision Blizzard, a report from Cheddar last week detailed how five employees from Apple verified claims the company was planning a “Netflix for games” type service.
Obviously, a Netflix acquisition from Apple is a huge long shot, but is it something you’d be interested in seeing? Tell us how you feel about this in the comments section below!
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