Reports: Apple In Talks To Buy Beats Electronics For $3.2 Bln

(RTTNews) - Apple Inc. (AAPL) is in advanced talks to buy high-end headphone maker and music-streaming service Beats Electronics LLC for $3.2 billion, according to media reports on Thursday. A deal, which could be announced as early as next week, would enable Apple to strengthen its music business.

Santa Monica, California-based Beats Electronics, co-founded by music industry executive Jimmy Iovine and hip-hop artist Dr. Dre, recently launched a new, subscription-based online music service known as Beats Music. For a monthly fees of $10, subscribers gain unlimited access to all of the songs in the service's catalog.

At Apple's iTunes Store, the biggest music retailer in the world, digital download sales are said to have declined for the first time recently as people increasingly turn to streaming music services like Spotify Ltd, Google Inc.'s YouTube, and Pandora Media Inc. (P).

Apple launched iTunes Radio, an advertising-supported internet radio service in September 2013. According to a survey conducted by Edison Research in March, iTunes Radio has overtaken Spotify to become the third most popular Internet radio in the U.S.. The Internet radio market is currently dominated by Pandora with a 31 percent share, followed by iHeart Radio with a 9 percent share.

In late March, Pandora's shares declined on reports that Apple may offer its iTunes Radio app for Android.

The deal to purchase Beats Electronics would be Apple's largest-ever acquisition. The largest purchase to date by Apple, which has a $151 billion cash pile, is its acquisition of NeXT Software Inc. for $400 million in 1997.

An acquisition of Beats Electronics would enable Apple to foray into the burgeoning market of subscription music. Apple was earlier said to be in talks with senior music label executives about launching a new music streaming subscription service.

Apple would also gain control of the Beats headphone devices, which are priced in a range from $170 to as much as $450. Beats primarily makes products under the brand "Beats by Dr. Dre".

Beats Electronics' investors include private equity firm Carlyle Group LP (CG) and Vivendi SA's Universal Music Group. Mobile phone maker HTC Corp. earlier owned a 51 percent stake in Beats, but sold back half of that sake in 2012.

AAPL closed Thursday's regular trading at $587.99, down $4.34 or 0.73 percent on a volume of 8.22 million shares.