After Apple Buys Beats' Streaming Music, Is Hulu's Video Next?

NEW YORK (TheStreet) -- The recent discussion surrounding Apple (AAPL) has centered on its rumored acquisition of Beats Electronics for $3.2 billion, the company's largest acquisition ever. 

I can't say whether this deal will turn out to be in Apple's best interest or not, or whether Apple made a poor decision or overpaid. The world's largest technology company has earned the right to spend its billions in whichever way it pleases.

Apple stock was at $590 at 12:15 p.m., down 0.7% for the day and up 7.4% year-to-date.

The general consensus -- especially here at TheStreet -- is that Apple is buying Beats Electronics for its streaming capabilities

Apple clearly missed the streaming music boat, likely because of its position in the paid music downloads space. While Pandora (P), Spotify and others gobbled up the streaming music market, Apple remained idle. 

Its late entry into the market finally came with the introduction of iTunes Radio, which has yet to take the world by storm. 

Perhaps Apple liked Beats' headphone technology. Maybe it's a step into the fashion and apparel business.

In any case, the Street's general consensus is that the move was made for streaming music. TheStreet's own Rocco Pendola suggests a number of select companies that Apple could acquire -- ones that would actually make sense too. 

The company's move to get into streaming music is interesting. And it brings us the big question: 

Is streaming video next? 

If streaming video is next, how would Apple go about doing it? It could develop the service in-house while acquiring or partnering with content companies, or do so via an acquisition. 

Many investors think Apple could buy Netflix (NFLX). But with a market cap of $21 billion -- and Apple would have to pay a premium over that -- and an incredibly high valuation, the deal is as unlikely as ever. 

Especially when you consider that the penny-pinching Apple just made its largest acquisition ever at only $3.2 billion -- that is, if the deal goes down.

Hulu is another video streaming service and considered by many as the runner-up behind Netflix. 

Last June, rumors circulated that a deal was nearly complete for its owners -- Disney (DIS), Comcast (CMCSA), and Twenty-First Century Fox (FOXA) -- to sell Hulu to a number of different bidders. Reportedly, the figure was just over $1 billion. 

The deal never got done. But for a company like Apple, $2 billion for a video streaming company is easily doable.

If Apple is indeed working on a set-top box for the TV (separate from the current Apple TV), streaming video and streaming music could be huge for the tech giant. 

Whether it's cheaper for Apple to develop in-house or acquire a company like a Hulu, I'm not sure. But the three owners of the latter have seemed almost anxious to unload the asset, as they have now tried to sell it twice before pulling out of negotiations. 

When the deals have fallen through though, Disney, Comcast and Fox have infused cash into Hulu to continue making it a more attractive platform for users. 

Only Apple will know which company to go after, if any, but don't be surprised if it finds a way to disrupt video and music streaming in the not-so-distant future. 

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At the time of publication, the author was long Disney but held no positions in any of the other stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

-- Written by Bret Kenwell in Petoskey, Mich.

Bret Kenwell currently writes, blogs and also contributes to Robert Weinstein's Weekly Options Newsletter. Focuses on short-to-intermediate-term trading opportunities that can be exposed via options. He prefers to use debit trades on momentum setups and credit trades on support/resistance setups. He also focuses on building long-term wealth by searching for consistent, quality dividend paying companies and long-term growth companies. He considers himself the surfer, not the wave, in relation to the market and himself. He has no allegiance to either the bull side or the bear side.

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