Apple should buy Netflix says analyst as iTunes rentals surge

Dec 30, 2010
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iTunes' rental business has already grown to 10-percent that of Netflix's, according to one analyst, and is likely to shift from being a hook for selling more Apple TV hardware and instead become a source of significant revenue in its own right. Gleacher & Co. analyst Brian Marshall suggested that cash-rich Apple's most sensible option would be to acquire Netflix, pointing out that "Netflix has approximately 150,000 titles, while Apple has just 15,000. Apple has a tremendous opportunity."

"Despite iTunes' TV/movie availability being only half as old as Netflix's service, it is our belief that iTunes' rental business is already roughly one-tenth the size of Netflix" Brian Marshall, analyst, Gleacher & Co.

Such a deal, Marshall calculates, could well reach $12bn assuming Apple paid a healthy 20-percent premium over Netflix's current market price. Still, the company is known to have cash reserves of around $51bn, which would make a Netflix acquisition at least possible, if still the most expensive in Apple's history.

Netflix's position is particularly strong, the analyst believes, because it is not only a rival to iTunes rentals but a partner on devices like the Apple TV. If Apple could bring that in-house, it would not only instantly boost its catalog of titles, but gain a significant bargaining chip in the growing streaming media market.


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