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Apple CEO Tim Cook. Photo by Bloomberg
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Why Apple Shouldn’t Buy an Entertainment Company

Photo: Apple CEO Tim Cook. Photo by Bloomberg

Film producer Jason Blum last week declared that tech companies wanting to get into streaming, like Apple, should buy a film studio. That would yield a “bigger audience for less money.” Apple has reportedly pondered buying a company like Time Warner in the past. It’s likely not the only tech company to have considered such a move. But judging by the $79 billion it cost AT&T to buy Time Warner, or the $70 billion Disney spent to buy Fox, Apple is lucky to have steered clear of such a deal.

Most major studios—including those that belong to Time Warner and 21st Century Fox—are owned by big companies that come with the baggage of cable channels. They generate lots of cash right now, raising the overall price of the acquisition, but will lose value as cord-cutting erodes their subscriber numbers in the next few years. Disney’s Fox purchase looks now like it may be a cautionary tale, at least from the standpoint of price. 

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