Published on February 5th, 2019 | by Brad Gibson0
Analyst: Apple should take $189B, buy Netflix, and guarantee its video service success
One Wall Street analyst apparently isn’t excited about Apple’s future streaming service plans and thinks it should just spend its nearly $250 billion in cash to either purchase Netflix outright.
JP Morgan analyst Samik Chatterjee said in an investors note, “We think Netflix is [the] best strategic fit [to create] 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.”
Netflix wouldn’t come cheap. Chatterjee said that Apple might be forced to pay a 20 percent premium to acquire Netflix, placing its purchase price at $189 billion.
Chatterjee said there are major concerns that Apple might not be so successful in its streaming service as some think.
“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.”
As a result, despite the cost, Chatterjee still believes buying Netflix could move consumers to its platform faster and easier.
“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.”