Walt Disney Co (NYSE:DIS) is not buying Netflix, Inc. (NASDAQ:NFLX) in 2017 for the basic reason that the merger will only lead to a conflict of interest given the two companies business model. The streaming giant impressive growth has come at the back of being able to stream content without paying preference to a particular production studio. That may not be the case if it agreed to be acquired by the studio giant.
Disney-Netflix Merger Skepticism
Were Disney to acquire Netflix, then it is more than likely that it would push for its content to be given preferential treated at the expense of other studio’s content. That is something that the streaming giant would find it hard to contend with, given that it is constantly looking for new content from all avenues in a bid of keeping subscribers happy.
Disney not Buying Netflix in 2017 could also be down to the fact that the theme park company is in a position to come up with its own streaming network instead of having to pay up to $70 billion to acquire one. However, that is not expected to quash talk of why it needs to push for a Netflix deal.
Why Disney Could Buy Netflix
The fact that Netflix has accrued a substantial amount of market share in the space with a subscription base of over 86.7 million people all but continues to make a case of why Disney should push for a deal. Even if the studio giant were to create, its own streaming network it would take years and the same could eat a considerable amount of money for the company to achieve what Netflix has achieved so far.
Even on failing to endorse a merger between Netflix and Disney, Bernstein analyst, Todd Juenger, is one of the people who believe the deal would happen if proved to lead to value addition to both entities.
“The salient question is whether the NPV, to Disney, of acquiring the assets of Netflix (including its ~90mm global subs, user interface, brand name, original programming, and user data, to name a few), is greater than or less than $70bn (compared to whatever is the base case scenario),” said the analyst in a note.
Disney not buying Netflix in 2017 would also not come as a surprise given the regulatory challenges that such a deal would face given its sheer size and potential impact on the overall industry.
Disney stock was down by 0.18% in Thursday trading session ending the day at lows of $98.94 a share.