Who doesn’t
like House of Cards? Netflix’s original
programming has been stellar. Ever since
Carl Icahn bought a large stake under $100 a share, it’s been all up hill since
then. I find that Netflix is in a very
interesting position currently. I’m not
talking about their stock price (over $400 a share) or their quarterly
subscriber growth. I’m talking about
something much bigger, game changing perhaps.
This week
Comcast and Apple were reportedly in talks in a partnership that would put
apple into Comcast boxes. Essentially,
it sounds like the “a la carte” ordering may be starting. Before Steve Jobs passed away,
revolutionizing the television industry was his latest and probably most
ambitious project. Why shouldn’t Apple
just buy Netflix?
What would Netflix’s
buyout price be? Is their one? Reed Hastings holds Netflix close to him like
any parent would a child. Apple has $73B
in current assets (liquid money).
Netflix has a market cap currently of around $22B. Retained earnings for NFLX are $555M (10X
retained earnings only values them at $5.5B). If Apple were to take in Netflix, they would
have a strangle hold on digital streaming.
However, Comcast’s acquisition of NBCUniversal looks more genius
everyday. If they did not buy
NBCUniversal, they would control no content.
This is the age of the content wars.
Content is king, just as cash is king.
Apple has
no content. Apple is the distribution
for all content (iTunes), however. If
Apple were to buy Netflix, all they would be getting is another distribution
channel. I would say a better fit for
Netflix may be Disney. Disney owns ABC
and ESPN. They have the content and they
have the distribution. Adding NFLX to
the Disney arsenal would be a solid investment.
So what is
the fate of Netflix, shall they go off quietly into the night, on their
own? Or shall they be bought and taken
in by a much larger parent company?
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