January 2, 2018, 12:04 pm
Contrary to the reports of Apple launching a video subscription product in 2018 to counter Netflix, analysts from Citi have said that the iPhone maker could possibly buy the entertainment company by taking advantage of US president Donald Trump’s corporate tax cut.
According to Citi analysts, Jim Suva and Asiya Merchant, there is a 40 per cent likelihood that Apple will acquire Netflix. Under the new taxing rules, the tech giant will be able to repatriate about $220 billion in cash to the US.
“The firm has too much cash-nearly $250 billion-growing at $50 billion a year. This is a good problem to have,” Suva and Merchant were quoted as saying.
“Historically, Apple has avoided repatriating cash to the US to avoid high taxation. As such, tax reform may allow Apple to put this cash to use. With over 90 per cent of its cash sitting overseas, a one-time 10 per cent repatriation tax would give Apple $220 billion for mergers and acquisitions (M&A) or buybacks,” they added.
A report in business insider said that iTunes has been a huge hit for the company, but viewers have migrated increasingly to services like Netflix, Amazon or Hulu to watch their favourite shows leaving Apple struggling to offer a compelling TV or movie offering.
In September 2017, reports poured in that Apple might lease the Culver Studios in California as it plans to pour $1 billion into TV and movie productions.
The battle for best movie scripts and television projects intensified between tech giants in the Silicon Valley. Google-owned YouTube is already producing original television series and Amazon has won Oscars for “Manchester by the Sea” show.
The iPhone maker has already hired top Hollywood talent Sony duo Jamie Erlicht and Zack Van Amburg to lead its Hollywood push and is reportedly developing a new TV show that will star Reese Witherspoon and Jennifer Aniston.