Is the Netflix ad-tier deal just phase one?
, Needham Senior Analysis Laura Martin contends this deal is simply Phase One of a wooing process that could bring Microsoft inside until it decides to bring Netflix all the way inside.
"Netflix is trying to get closer to Microsoft in hopes that, after Microsoft digests its Activision acquisition, it turns and buys Netflix next," said Martin, referencing the still under regulatory scrutiny. As Martin rightly assumes, Microsoft is unlikely to make any other company buys - at least of this size - until that deal is done. And, oh yes, a Netflix acquisition would be big, massive even. The company is estimated to be worth around $176 billion.
My immediate reaction to this idea was,"No. Belch. Why? No synergy." Granted, this was a gut reaction, and not well considered. The reality is that this could be either an awful or brilliant acquisition for the 47-year-old company. The why of such a potential acquisition is obvious. Netflix needs a larger company to help shield it from the vagaries of the market while it deals with the ebbs and flows of subscribers and fights and spends to create audience- and award-winning content.
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