Netflix shares have gone up 5.67% on the last trading day thanks to the rumors currently spreading among investors. Sentifi has captured very early that M&A rumor and analyzed it.
In 2012, Disney and Netflix entered into a blockbuster agreement that makes the streaming service the exclusive U.S. subscription service for first-run films from Disney, Walt Disney Animation, Marvel and Pixar. The deal will make Disney-released titles in 2016 available on Netflix during the same time window in which they come to pay-television channels.
More importantly, the agreement will be exclusive for all subscription services, meaning services such as HBO and Showtime won’t have access to Disney movies. It’s a once-in-a-lifetime deal for Netflix.
Even if Disney ended up not buying Netflix, the streaming service’s shares will remain bullish as demand for Disney movies will likely be very high, and the streaming service will no doubt capitalize on that.
Thus, on paper, it makes a lot of sense for Disney to acquire Netflix. First, Disney would have the ability to pick and choose which titles to make available on Netflix, adding value to each title.
Second, Disney would be able to take advantage of Netflix’s rising stock value and revenue. Keep in mind that Netflix has recently expanded to 190 countries earlier this year, which means the Disney titles on Netflix will reach a huge viewer base. Couple that with the streaming service’s promising overseas sale, and it’s safe to say Netflix will see a jump in revenue once the Disney titles are made available.
It makes perfect sense for Disney to acquire Netflix. Disney’d better make the right move. The markets are watching.
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