Analyst: A Netflix Acquisition Makes Sense for Apple

| Apple Stock Watch

Brian Marshall of Gleacher & Co. thinks that a Netflix acquisition would make sense for Apple. Mr. Marshall made the comments during an interview on CNBC where he was asked about ways Apple might spend its $51 billion cash hoard. According to the analyst, Netflix’s appeal for Apple is its large movie library.

“I do think that [a Netflix] transaction could make sense,” Mr. Marshall said. “You know, Apple wants to be the first company (in my opinion) to seamlessly integrate the home office and the living room. And what’s limiting them in terms of doing that now now is basically content and better broadband into the home.”

He added, “If you look at content, they have over 10,000 movie titles on iTunes. Netflix obviously has over 100,000 movie titles. I think that would be a pretty interesting marriage right there.”

He said that the numbers make it an easy purchase for Apple. At $10 billion, a Netflix acquisition would represent less than 20% of Apple’s cash holdings — even assuming that such a deal would be all cash — an easy buy for a company that generates more than $5 billion per quarter in cash.

As for Sony, Mr. Marshall dismissed the so-called rumor out of hand, noting that it doesn’t make sense for Apple. Tales of a possible Sony buyout began circulating Tuesday morning, but as The Mac Observer already reported, the source of this rumor was merely a speculative piece on what Apple might do with its money, not an actual leaked source.

You can watch Mr. Marshall’s interview in the video below. His segment begins at the 1:36 mark. Note the quip near the beginning when the anchor, Melissa Lee, asks if the analyst had cornered the CEOs of Netflix or Apple in a coffee shop. Ms. Lee was referencing a recent story when Brian Marshall said that Apple COO Tim Cook had told him in a coffee shop that he wasn’t going to move to HP.

Shares in Apple edged lower Tuesday, ending the day at $308.05, down $0.79 (-0.26%) on light volume of 13.8 million shares trading hands.

CNBC Video

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Comments

geoduck

Does NetFlix ‘own’ the titles or just have a contract to supply them for online and snail mail rental.

If the latter then the studios, who haven’t been thrilled with Apple’s power, could just cancel the contracts at their first opportunity making this a waste.

jun

If Apple buys Netflix, I cancel my subscription.  It would be a massive disaster for Netflix and for all movie watchers.  Why doesn’t Apple try selling groceries through their stupid iTunes program too?  They are too big for their britches and need to be brought down.

vasic

They are too big for their britches and need to be brought down.

????!!!

Just because they are too big? That’s a valid reason??

graxspoo

I agree. I don’t want Apple buying Netflix. They’d make it so the DVDs would only play on special drives they sell, and you need to validate the DVD with iTunes before you and play it, or something crazy like that. Everything must go through iTunes in their vision of entertainment. It’s freakin annoying. I like how Netflix streaming works on many different platforms like Roku, Samsung, Apple TV, Boxee and so on. Kiss that goodbye if Apple buys them.

b0wz3r

Go away stupid troll!!!

If Apple buys Netflix, I cancel my subscription.? It would be a massive disaster for Netflix and for all movie watchers.? Why doesn?t Apple try selling groceries through their stupid iTunes program too?? They are too big for their britches and need to be brought down.

b0wz3r

So you already know what’s going to happen with this I see.

Why don’t you enlighten us.  Give us SPECIFIC details of how Apple is going to do this.

And I say GOING because your statements here are not interrogatives or suppositions, but flat out statements.

I agree. I don?t want Apple buying Netflix. They?d make it so the DVDs would only play on special drives they sell, and you need to validate the DVD with iTunes before you and play it, or something crazy like that. Everything must go through iTunes in their vision of entertainment. It?s freakin annoying. I like how Netflix streaming works on many different platforms like Roku, Samsung, Apple TV, Boxee and so on. Kiss that goodbye if Apple buys them.

CudaBoy

Far as I know, Netflix doesn’t “own” any intellectual property.
I don’t know why Apple would buy a dying horse!
“Objects” like discs seem to be about 10 minutes away from being obsolete - see CD’s. What does Apple need with millions of crappy plastic discs??
Streaming and d’loading seems to be the future, and if so Apple doesn’t need Netflix for that unless they could save millions on legal clearances for content but then I’d assume the clearances aren’t transferable anyway so I am puzzled.

MacKeeper_fan_Mod

Apple methodically and without hurry tries to bend Internet under themselves. No cause, is Neflix dying or prosperous project, it’s buying will strengthen positions of Apple in the Net. I am not against this, services which’re controlled by Apple work rather well, but some people can estimate these actions as first steps on the path of making a monopoly. But Apple won’t become a monopoly, ‘cause it’s goods are too good (forgive me my play on words) and too expensive to supplant other companies. So, it works in domain services and it works well.

MacKeeper_fan_Mod

And I want to add that despite on my positive attitude to Apple’s services I join to another people who didn’t approved the Netflix acquisition, ‘cause this is a very good zone for selling of some of Apple’s products but it will help the service in it’s development.

Jamie

I’m beginning to think, no disrespect intended to any of you, that a lot of the posters here are on the younger side. Apple tries to bend the internet? No. They do bend things for their own products, and more often than not these days (not always, though!) the market tends to follow.

Rest assured, I don’t like everything that they do myself, but I love it when anyone says Apple is getting ‘too big for its britches’. Damn them for actually competing and making it easy for people to buy the things they enjoy and being successful at it! G*d damn them!

jfbiii

I think that the analyst doesn’t understand, as others have pointed out, how content licensing works.

spudgeek

Does NetFlix ?own? the titles or just have a contract to supply them for online and snail mail rental.

geoduck is on the mark?

The TV & movie industries are skeptical of giving Apple too much control of distribution. An Apple acquisition of Netflix would buy distribution licenses which can probably expire or be terminated at the will of the industry players. Furthermore, it seems that Apple have changed their stance in the game as AppleTV moves into the iOS Apps arena allowing 3rd party players in the game with NetFlix in as an early adopter. Others will join as they have for the other iOS devices (Hulu, ABC, etc.). Verizon announced in Sept. that they plan to release an iOS app early next year to allow FiOS subscribers access to their content (live TV, VOD, etc.) - makes sense to include aTV compatibility. Others will follow. Game apps will extend to aTV? think racing game using iPhone or iPod touch as controller; scrabble; labyrinth?

When Apple developed the iPod they needed iTunes to provide a legit way for consumers to buy and download music. They later added TV, movies and podcasts because it made sense. With iPhoneOS they learned of the need for 3rd party developers to contribute wares (apps) and in doing so created a new very profitabble business line with the app store. With the new App Store business Apple don’t need movie and TV distribution licensing to sell iOS devices as they did with iPods because other businesses like NetFlix can join the game with their own iOS apps.

Apple makes and sells hardware; they develop software and content distribution to complete the Apple experience. They simply don’t need to master content distribution anymore with the App Store and NetFlix et al.

Sonicview

Wow! This is very interesting article, i will share this to my friends.

kevinolive

Whether it is corporate acquisitions or hardware changes, I find it quite entertaining to see how much time, energy and emotional investment is put into speculating what Apple will do next.

gslusher

I?m beginning to think, no disrespect intended to any of you, that a lot of the posters here are on the younger side.

It’s also possible that the posters you’re talking about are not native English speakers. That could also account for the strange grammar, word choice and word order, not to mention spelling.

Bill

Does NetFlix ?own? the titles or just have a contract to supply them for online and snail mail rental.

If the latter then the studios, who haven?t been thrilled with Apple?s power, could just cancel the contracts at their first opportunity making this a waste.

My thoughts exactly. The studios have made it clear that they want to work with anyone but Apple. If Apple buys Netflix, the studios simply won’t re-new or cancel their contracts outright leaving Apple the proud owner of a has-been streaming service.

Apple buying Netflix is just a bad idea.

I’d be fine with them buying Adobe though.

jfbiii

The only reason they want to work with anyone, though, is because of Apple. They’d much rather work with nobody. But because the iTunes store is so big, they’re desperate to prop someone else—anyone else—up. It’s why Amazon got a no DRM deal that they wouldn’t extend to Apple. It’s why Apple got the worst DRM-free deal. Not that it matters, really, most people prefer the convenience.

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