I'm amazed nobody has mentioned the glorious AOL/Time Warner merger.
Should Apple buy Time Warner, at a P/E of about 15 and Market Cap of $58 billion?
Should Apple buy Netflix, at a P/E of about 350 and a Market Cap of $43.6 billion? (If Netflix was selling at a P/E of 15, its Market Cap would be about $1.9 billion.)
Time Warner may be old, boring media (music, movies, broadcast TV, cable TV), but it owns a huge vault of content in just about every medium. A Netflix-like service that does nothing more than pull from all the Time Warner brands (rather than brand-specific like HBO Now) would be very attractive, and due to its ongoing relationships with other content producers and distributors, the other content companies will come on board as well. Time Warner's team would have far fewer problems launching such a service than Eddie Cue/Jimmy Iovine/Dr. Dre would on their own - Time Warner's own content holdings give it huge leverage. It'd be more like, "This is happening with or without you. You want a piece of it, or not?"
What of Netflix? Before it reaches corporate maturity, to justify its current price, Netflix would have to grow by a factor of 30 - assuming no change in subscription prices/growth by economic inflation, that means going from 80 million subscribers to 2.4 billion. Seems a pretty daunting task - if a similar, competing service came to dominate the market in China or India, the chances of reaching 2.4 billion (or "just" 1.2 billion) seem pretty dim.
Further, Netflix' biggest potential competitor is already in place - YouTube (Alphabet/Google). (Amazon has plenty of potential, too.) Alphabet, as always, is focused on advertising revenue rather than subscriptions, but nothing precludes adding subscriptions to their revenue mix (I think I read that something of the sort may already be in the works).
Compared to Time Warner, Netflix owns zero content - the last couple of years worth of HBO original content eclipses everything Netflix owns. There's an old saying, "Content is king." No matter what service Apple launches based on Time Warner content, that same Time Warner catalog continues to rake in bucks in all the old familiar places. It can and does show up on "competing" networks and services on a constant basis - no matter what content delivery companies come out on top, Time Warner content will be there.
So, I think Time Warner is by far the better target for Apple (Disney's another). Netflix might do well to merge with Time Warner or Disney (too small to acquire outright), but it wouldn't be a very attractive deal for shareholders - again, the chances of Netflix growing to justify its current price don't seem all that good to me.
An Apple/Disney combination would have one more interesting, albeit meaningless side-effect - the "grand reunification" of the Steve Jobs Universe (Laurene Powell Jobs is Disney's largest shareholder at 7.5%, due to the Pixar merger).