Apple Looks To Buy Original Programming, But How Much Will It Spend?

Apple is preparing to join the pack of companies that buy and promote original TV and film productions, although its investment would be far smaller than more established players including Netflix and Amazon, the Wall Street Journal reports.

The publication, citing “people familiar with the matter,” says that Apple wants to offer productions this year to subscribers of its Apple Music on-demand streaming service. It’s talking to “veteran producers” about deals for scripted TV programming, with movie plans “more preliminary.”

The goal, it seems, is to help Apple Music distinguish itself from other music streaming services including Spotify, Pandora, and Google Music.

But even a modest investment in content could represent “a transformative moment for Hollywood and mark a significant turn in strategy for Apple as it starts to become more of a media company,” the Journal says.

Apple has long said that it wants to play a bigger role in media. In October, CEO Tim Cook said that television is “of intense interest to me and other people here.” He added that Apple has “started focusing on some original content” which he called “a great opportunity for us both from a creation point of view and an ownership point of view. So it’s an area we’re focused on.”

Thus far the company has made small investments in music-related documentaries and rights to produce a half-hour interview show based on the “Carpool Karaoke” segments on CBS’ The Late Late Show with James Corden.

Apple shareholders have long wondered whether it would buy a big media company, or invest heavily to build one, as sales growth slows for iPhones, its cash cow.

“Most investors see prominent established video services as top candidates” to be acquired by Apple, Morgan Stanley’s Katy Huberty noted this week. But while “that would make some sense,” she believes “Apple could be looking to launch a differentiated video service instead of acquiring an existing platform.”

The danger for Apple is that its investors are accustomed to its nearly 40% profit margin. That would be hard to duplicate if the company enters a highly competitive business with several established powers.

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