Netflix could be Disney’s ‘only hope,’ says BTIG analyst

When you own the movie studio responsible for a film that in about four months has grossed more than $2 billion worldwide, it seems like you would be hard-pressed to find reasons to be too concerned about your business.

But even with a gigantic hit in the form of “Star Wars: The Force Awakens,” courtesy of its Lucasfilm division, Disney has issues. Big ones, according to BTIG media analyst Rich Greenfield. Those include Disney-owned ESPN (along with Time Warner’s Turner Sports) paying $2.6 billion a year to broadcast National Basketball Association games under a new, nine-year contract that starts with the 2016-17 season.

So, what should Disney do? How about write a check for, oh, say, between $50 billion to $100 billion?

Those are the amounts that Greenfield says Disney may have to spend in order to make a deal if its wants to to “radically transform its business” at at time of concerns about the outlook for its ESPN sports TV network and its executive succession plans.

And what would Disney get for those prices? Greenfield says the “only two assets that come to mind” which could reshape Disney and bring in new leadership at the company are Snapchat and Netflix. But while both companies may look appealing, Greenfield said either one comes with its own issues that could be too much for a business of Disney’s character to overcome.

In the case of Snapchat, which Greeefield admitted that at $50 billion estimate might be low-balling the value of the image-messaging app company, due to what he called “their trajectory of engagement and product innovation.” Greenfield added that it’s unlikely Snapchat could “flourish” inside of the Disney corporate culture.

“An acquisition of Snapchat just seems too hard to believe right now, even if it would actually be the right move to vault Disney into a leader in mobile communications and content delivery,” Greenfield said in a research note Friday.

With regards to Netflix, Greenfield said it’s doubtful the company would sell for anything less than $100 billion. But even though Greenfield said such an “acquihire” would be almost unimaginably expensive, “it could be Disney’s only hope.”

“Combining Disney and Netflix effectively recreates the best of the legacy video bundle, removes the distributor, packaging together great content with best-in-class technology spanning all devices consumers love to use,” Greenfield said. “But the really exciting aspect for Disney, would be to bring in a visionary CEO, who understands the future of content and video programming in Reed Hastings. For Netflix, they get permanent access to the content creation of the world’s most prolific studio. On the other hand, it is quite hard to conceive how Netflix’s great price-value equation is sustainable if it has to incorporate overpriced (and) inefficient content such as ESPN.

Photo: Netflix’s headquarters. (Bay Area News Group archives)


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  • sd

    Like Disney doesn’t already own enough….

  • EllaFino

    Oh please, they have been predicting Disney’s downfall forever.