Which Studio Would Apple Want to Buy?

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Apple CEO Tim Cook

A24 has been a rumored target of the tech giant, but MGM or Lionsgate could be alternatives.

The latest rumor that Apple had kicked the tires on an acquisition of A24 has reignited speculation that the tech giant wants to buy a studio so it can better compete with Netflix, Amazon and Hulu in the lucrative streaming media market.

Apple has $285 billion in cash, so it can afford to buy practically anything it wants, though it remains to be seen how serious the company is about getting into the content business, even though investors are clamoring for the next big thing to come from the pioneering company behind iTunes, iPhones and iPad.

While A24 looks like a nice, relatively cheap fit, reports of serious discussions between the two may be more about partnerships than of an outright acquisition of the company behind Oscar-nominated films like Lady Bird and Moonlight.  

Apple has said that it would spend $1 billion making original content this year, like another season of Amazing Stories, a reboot of Steven Spielberg's 1980s anthology series, and an upcoming drama from Reese Witherspoon and Jennifer Aniston, but that's a pittance compared to the $8 billion Netflix is expected to spend this year.

If Apple is to get more seriously in the game, it should buy an established studio, observers say. But the company doesn't like to spend money on acquisitions — its largest in recent memory being the $3 billion purchase of Beats Music four years ago.

"Apple may want to acquire a studio in order to deepen its relationships in Hollywood, access a deep library and secure a quality development pipeline," says Ben Weiss, chief investment officer of 8th & Jackson Capital Management.

Some have opined Apple might just bite the bullet and try to buy Netflix, though when The Hollywood Reporter speculated on such an acquisition in 2016, Netflix was valued at $40 billion. Since then, its market capitalization has swelled to $128 billion.

"Apple has a history of making smaller acquisitions, such as Beats, to acquire talent and intellectual property that it can leverage across its product and services platform," says Weiss.

Another name bandied about is MGM, the studio behind the James Bond film franchise and Mark Burnett reality TV shows. But MGM, valued somewhere north of $4 billion, recently parted ways with its CEO, Gary Barber, and one of the reasons was that Barber wanted to sell while the investment groups that own MGM do not.

Lionsgate, valued at more than $5 billion, is another possibility. John Feltheimer, the CEO of the studio behind the Hunger Games and John Wick movie franchises, not to mention TV shows like Orange Is the New Black and Nashville, has often considered a sale. Billionaire mogul John Malone has a big stake in Lionsgate, and he's constantly looking for media assets to buy, sell and spin off. 

Still, there are many who view Apple as being quite content to slowly build out its own studio, seeing as the world's most valuable company has had massive success doing its thing on its timeline.

"It is unlikely Apple buys a studio," says Steven Birenberg, founder of Northlake Capital Management. "They seem to be just getting started in producing their own shows and seems like they would give it some time to see how they do."