Apple should buy Netflix says analyst as iTunes rentals surge

Dec 30, 2010
Apple should buy Netflix says analyst as iTunes rentals surge

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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