Tags: netflix | disney | investors | streaming | synergy

Netflix-Disney Combo: Investors Drool Over Streaming Synergy

Image: Netflix-Disney Combo: Investors Drool Over Streaming Synergy

(Disney; Netflix)

By    |   Wednesday, 05 Oct 2016 09:16 AM

A Netflix-Disney rumored combo pushed the video streaming company's shares up higher and higher on Monday and Tuesday as investors started to drool over the synergistic potential.

Reports had Walt Disney Co. considering a bid for the social media site Twitter, according to MarketWatch on Wednesday, but the media giant also has its eye on Netflix, which apparently excited investors.

Variety said Netflix stock closed at $102.63 per share on Monday, on higher-than-usual volume, and on Tuesday the streaming video company's shares rose as high as $104.44 in early trading before settling down to below the opening price of $103.50 on Tuesday.

"With Disney's record of successful high-profile acquisitions, some analysts say making a play for a company to move ESPN parent Disney further into streaming video, especially in sports content, makes perfect sense," noted Trey Williams of MarketWatch.

Variety said Netflix investors have been worried about the video streamer's slowing growth in America while it starts to move all subscribers to a $9.99-per-month model, but said Disney would face challenges in attempting to corral Netflix.

"The first issue for Disney would be trying to justify the massive purchase price: Netflix trades at a whopping price-earnings ratio of around 320, and any deal would have a negative impact on Disney's balance sheet and earnings," said Todd Spangler, New York digital editor for Variety.

"Disney also would face other potential hurdles if it actually moved to buy Netflix, including regulatory scrutiny and the fact that rival studios would be even more reluctant to play ball with a Disney-owned Netflix," said Spangler.

Netflix has more than 83 million members in more than 190 countries, according to the company's website. Netflix said its members watch more than 125 million hours of television shows and movies per day, including original series, documentaries, and feature films.

Those original shows including the award-winning "House of Cards" and "Orange is the New Black."

Bloomberg noted last month that Disney's largest business, cable television, has been losing viewers and facing more competition from online video services like Netflix. The company has invested in other technology-related media businesses, including the Hulu video streaming service and digital media company Vice.

Disney also purchased Major League Baseball's BAMTech, which provides the platform for online video services such as HBO Now.

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A Netflix-Disney rumored combo pushed the video streaming company's shares up higher and higher on Monday and Tuesday as investors started to drool over the synergistic potential.
netflix, disney, investors, streaming, synergy
379
2016-16-05
Wednesday, 05 Oct 2016 09:16 AM
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