Who's Buying Netflix? - Apple vs. Time Warner

In the continuing battle to see who will buy Netflix, we enter into bottom half of our eight team tournament, with Google and Amazon already scoring victories, it's time to see which of the following companies will join them in the "Final Four."
In today's match-ups, 5 seed Viacom takes on 4 seed Comcast, and 3 seed Apple takes on 6 seed Time Warner.

Apple vs. Time Warner
The cult of Jobs is running on full steam, with their 100 billion in cash making an acquisition like Netflix akin to a Tyrannosaurus Rex popping a Chicken McNugget into its mighty jaws.
To boot, the mythical Apple TV is due soon, which will likely be a giant, razor thin flat screen, controlled by a Siri remote with maybe one button, that is assuming they want to complicate things.
However, as I will describe below when I speak about Viacom, Apple does not appear to want to pay for content, letting others create it while they continue to specialize in making the god damned best hardware on the face of the earth.
Netflix, in an effort to differentiate itself from its upcoming competition in streaming video, has plunged good money into developing its own shows.
For the bottomless pockets which Apple has, they have shown remarkable restraint in buying companies, purchasing only if it met its broader strategy, and I just don't see Netflix fitting in.
Time Warner Cable certainly has the pipes and the distribution network. They also are the parent company of HBO, whom Reed Hastings describes as his biggest competitor. The content that HBOGo streams is pretty much untouchable, and I don't forsee them sharing the rights to it with anyone.
In trying to model HBO, as I mentioned above, Netflix is producing its own shows. I'm positive HBO execs will be watching.
It's one of those situations where HBO is off limits, but Netflix isn't. I was often frustrated that I wasn’t able to stream Curb Your Enthusiasm , and I'm sure I'm not the only consumer who would willingly pay a little extra for HBOGo + all the Netflix content.

Apple vs. Time Warner analysis

There then, is my argument that it simply makes more sense for Netflix to be acquired by Time Warner at this juncture than it does Apple. A rare loss for Apple, but Time Warner advances into the winners circle.

Time Warner advances in an upset over Apple

Comcast vs. Viacom
Fourth seed Comcast versus five seed Viacom.
Let's take a look the resumes. First up, Comcast has recently launched Xfinity Streampix, priced to Comcast subscribers at $4.99, given away to those who pay for a premium subscription. 
Importantly, Comcast has no plans to make Streampix available as a standalone service: To get it, you must subscribe to both Comcast’s TV and broadband video services. That means so-called cord-cutters, need not apply.
A majority of the content that Comcast owns, has already been licensed to Netflix, so in purchasing the company, it could be easily argued they would in a sense be turning off the spigot on their own revenue streams. 
Additionally, Netflix has opened their arms to cable providers, hoping to soon become a stand alone channel, but were not invited to the prom, and Reed is now sulking in the corner. 
Looking at Viacom (who own CBS and Comedy Central among other stations) this is also a case where a major content provider would be robbing itself of highly valued revenue by buying their buyer.

Viacom versus Comcast

I also wish to quote Viacom CEO Les Moonves about talks he had with Steve Jobs about putting his content on ITunes--
“There was a story reported, which was true, about Steve Jobs and I discussing putting CBS content on Apple, but we felt he didn’t want it pay for it. What Netflix is paying for right now, they’re giving us hundreds of millions for that content, Steve Jobs wanted us to put the content on and play with him on terms of subscriptions. We didn’t think that was the wisest thing to do. We need to be protective of our content. We make billions in advertising. We make billions in syndication. We make hundreds of millions in retransmission. The idea is to put your content online, that enhances that, doesn’t take away or cannibalize our main business. Our content are the family jewels.”
Based on this, Viacom simply isn’t a buyer.
Comcast advances by default.

Stay tuned tomorrow for the Final Four and Finals action, where I discuss in depth which company I think is most likely to acquire Netflix and why. Please note, the purpose of this exercise is to take a look at all the possible angles in taking a stock position, in this case reasons to buy or short Netflix. (for me a short)


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