Disney’s interest in NFLX has been rumored for months, and is likely to only intensify now that AT&T is buying Time Warner. What’s more, AT&T will also roll out a very cheap streaming TV service soon, confirming its ambitions in the over-the-top (OTT) content space.
As a wave of consolidation is hits the media/content/delivery space, DIS has a unique opportunity to kill two birds with one stone. The company has two problems right now: it needs more OTT distribution, and it needs a new CEO.
Netflix has by far the largest footprint of any OTT distributor, so that would solve problem one. As for problem two, Disney’s current CEO Bob Iger will retire 2018, after already postponing his departure twice. Enter Netflix CEO Reed Hastings, who could take over as chief executive of the newly-combined company.
The deal seems to make sense for many reasons. From TechCrunch:
In one fell swoop, Netflix-land would give Disney an undeniable and daunting lead in the OTT video game that signals to the world that it is here to play in the brave new digital world. Disney’s content library — the envy of the world — would be tough for any competitor (no matter what size) to beat if featured exclusively on a Disney-owned Netflix service.
And, Disney’s global multi-platform marketing machine is second to none and holds the unique power to promote Netflix’s already near-ubiquitous brand in a borderless world. In Disney’s hands, Netflix also would demonstrate to both investors and the Street that Disney has the tech-driven DNA necessary to drive the machine and succeed in our new Media 2.0 world. Enter Reed Hastings, the Mouse House’s new big cheese.
Such a deal could be the cherry on top of a year that’s seen an incredible amount of mergers and acquisitions (M&A) activity, and position the new company for media dominance for many years to come.
Netflix shares rose $0.17 (+0.15%) to $114.95 in premarket trading Monday. Year-to-date, NFLX has gained 0.35%.