Microsoft may buy Netflix
2022.12.20 11:48
Microsoft may buy Netflix
Budrigannews.com – Satya Nadella continues to imagine greater possibilities. The chief executive of Microsoft (MSFT.O) has been making rapid acquisitions of new businesses. In the year 2023, look for him to include Netflix (NFLX.O) on the list.
Nadella has been on a costly shopping spree ever since he was promoted to the technology giant’s corner office in 2014. It began with the acquisition of the Minecraft-based company for $2.5 billion. Afterward, Microsoft purchased LinkedIn for $26 billion and the discourse acknowledgment and computerized reasoning programming engineer Subtlety for $20 billion. With a reported value of $69 billion, Activision Blizzard (ATVI.O) was by far the largest target.
Microsoft is busy fighting trustbusters in the United States for the right to acquire the developer of “Call of Duty.” Regulators are concerned about market dominance as a result of it being housed under the same roof as Xbox gaming console. Owning Netflix would make strategic sense and probably be easier to sell in Washington and Brussels even if Nadella loses out on the video game company due to competition.
Already, the two businesses share many similarities. For a brand-new subscription service that relies on advertising, Netflix selected Microsoft as its advertising partner. Brad Smith, the president of Microsoft, is on the Netflix board as well. Microsoft’s desire to offer a video game streaming service across multiple devices is one of the reasons for a deal.
Netflix has its own significant gaming plans. The company co-led by Reed Hastings purchased developer Spry Fox, which became its sixth in-house studio, in 2022. Taking part in the Microsoft empire would boost those goals even further. It’s not hard to imagine a bundle that includes games and streaming television.
As of the beginning of December, Microsoft can afford Netflix because its market value is 13 times that of Netflix. The Netflix company would be worth nearly $190 billion at a premium of 30%. However, it would be hard to find significant cost savings. According to Morningstar analysts, the implied return on investment would only be half of Netflix’s 8% weighted average cost of capital after taxing the $8 billion in operating profits anticipated by analysts for the year 2024.
In the past, Nadella has defied such conventional financial logic. In addition, he has demonstrated a willingness to boldly negotiate. Microsoft is likely to target Netflix on this basis, which makes it easy to believe.
On December 8, the Federal Trade Commission of the United States filed a lawsuit to prevent Microsoft from acquiring video game developer Activision Blizzard for $69 billion. The FTC argued that Microsoft’s acquisition of Activision Blizzard would harm consumers because it would give the software company an unfair advantage over competitors of its Xbox gaming consoles and cloud gaming business.
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