Netflix and HBO would be a blockbuster duo
The author is a Reuters Breakingviews columnist. The opinions expressed are her own.
By Jennifer Saba
NEW YORK, July 18 (Reuters Breakingviews) -Netflix NFLX.O is already the apex predator of the streaming world. But the company co-led by Ted Sarandos does surprisingly little hunting. Netflix’s merger ambitions have so far been distinctly modest. With a possible breakup of rival Warner Bros Discovery WBD.O, Sarandos might find his claws.
WBD boss David Zaslav is considering strategic options for the $21 billion media company, whose hit shows include “House of the Dragon.” His options include selling assets or spinning off divisions, the Financial Times reported on Thursday, citing people familiar with the matter. It’s not a surprise he’d be trying new tricks: Discovery’s merger with Warner Media in 2022 hasn’t lived up to hopes. Shares of the resulting WBD, which owns news network CNN, the movie studio behind “Barbie” and HBO, have fallen 66% since its creation.
One option is to hive off WBD’s streaming service Max – which also houses HBO – and its TV and movie studio, Warner Bros. Together, they’re expected to make around $3.4 billion of EBITDA in 2025, according to analyst estimates polled by LSEG. Max isn’t as profitable as Netflix, which has a chunky 25% EBITDA margin. But value streaming and studios on a multiple of 17 times – about a quarter less than Netflix – and they could be worth roughly $60 billion. The studios might even get a premium, as one of the most successful production houses in the industry.
Even for the mighty Netflix, with a market capitalization of $280 billion, that’s a big bite. The company, which is expected to report second-quarter earnings on Thursday, has $7 billion of cash, so nowhere near enough to cover a deal like that. But Netflix could issue shares, which would equate to one-fifth of its market value.
Given Sarandos’ M&A reticence, it would take something extraordinary to prompt such a change of strategy. But WBD’s assets, once split from its stodgier linear TV networks through a breakup, might pass the bar. It would give Sarandos valuable marquee intellectual property including “Game of Thrones” to keep viewers and gain more. A crackdown on password sharing is expected to reap an additional 5 million subscribers for a total of 275 million, according to estimates from LSEG. And Netflix has sniffed around other properties including Paramount Pictures. Netflix, like all streamers, craves exciting content. A merger with HBO could give it a blockbuster.
Follow @jennifersaba on X
CONTEXT NEWS
Warner Bros Discovery Chief Executive David Zaslav is considering several strategic options for the $21 billion media company including asset sales and spinoffs, according to the Financial Times on July 18, citing people familiar with the matter.
Since WBD closed its purchase of Warner Media from telecoms operator AT&T in April 2022, the shares have declined 66%.
Netflix will report second quarter earnings on July 18. Analysts expect the streaming video company to add 5 million net subscribers in the quarter, according to estimates from LSEG.
Graphic: Warner Bros Discovery's value plummets https://reut.rs/3Sd5ckY
Editing by John Foley and Pranav Kiran
면책조항: XM Group 회사는 체결 전용 서비스와 온라인 거래 플랫폼에 대한 접근을 제공하여, 개인이 웹사이트에서 또는 웹사이트를 통해 이용 가능한 콘텐츠를 보거나 사용할 수 있도록 허용합니다. 이에 대해 변경하거나 확장할 의도는 없습니다. 이러한 접근 및 사용에는 다음 사항이 항상 적용됩니다: (i) 이용 약관, (ii) 위험 경고, (iii) 완전 면책조항. 따라서, 이러한 콘텐츠는 일반적인 정보에 불과합니다. 특히, 온라인 거래 플랫폼의 콘텐츠는 금융 시장에서의 거래에 대한 권유나 제안이 아닙니다. 금융 시장에서의 거래는 자본에 상당한 위험을 수반합니다.
온라인 거래 플랫폼에 공개된 모든 자료는 교육/정보 목적으로만 제공되며, 금융, 투자세 또는 거래 조언 및 권고, 거래 가격 기록, 금융 상품 또는 원치 않는 금융 프로모션의 거래 제안 또는 권유를 포함하지 않으며, 포함해서도 안됩니다.
이 웹사이트에 포함된 모든 의견, 뉴스, 리서치, 분석, 가격, 기타 정보 또는 제3자 사이트에 대한 링크와 같이 XM이 준비하는 콘텐츠 뿐만 아니라, 제3자 콘텐츠는 일반 시장 논평으로서 "현재" 기준으로 제공되며, 투자 조언으로 여겨지지 않습니다. 모든 콘텐츠가 투자 리서치로 해석되는 경우, 투자 리서치의 독립성을 촉진하기 위해 고안된 법적 요건에 따라 콘텐츠가 의도되지 않았으며, 준비되지 않았다는 점을 인지하고 동의해야 합니다. 따라서, 관련 법률 및 규정에 따른 마케팅 커뮤니케이션이라고 간주됩니다. 여기에서 접근할 수 있는 앞서 언급한 정보에 대한 비독립 투자 리서치 및 위험 경고 알림을 읽고, 이해하시기 바랍니다.
