It was finally over. of the Netflixof the (NASDAQ: NFLX ) Tried to get it widely Warner Bros The streaming specialist ended up walking away, unwilling to match the (in Netflix’s view) prohibitively high offer from another Warner Bros. friend, Paramount Skydance.
The market cheered Netflix’s decision, sending its stock higher on the news. The streaming giant could unlock significant value from Warner Bros. A portfolio of rich media assets over time. Still, Netflix has reached the top of the streaming industry itself.
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A number of positives emerging from Netflix’s decision to surrender to Warner Bros. make the stock attractive. Here are two of them.
The proposed acquisition of Netflix has raised antitrust concerns. A number of lawyers expressed serious objections, fearing that the deal would make the company too big and powerful.
Organizers weren’t the only ones with reservations. Some media industry insiders and at least one union representing media writers strongly opposed the acquisition. If Netflix had decided to go ahead, it would still need regulatory approval from the relevant US authorities.
It was probably the time and the most public, the worst battle with some famous and influential lawyers. Netflix may have come out with a deep library of characters and movies, but with a somewhat painted image. Maybe things will be resolved eventually – time heals all wounds, or so they say.
Even so, now that Netflix is back, it’s putting an end to all that confusion. This is good for the company’s public perception and, ultimately, for its brand name, which remains one of its most valuable assets.
The total value of Warner Bros.’s proposed acquisition of Netflix would be $72 billion, which the streaming giant would have paid in cash. The deal will add significant debt to the company’s balance sheet.
Now that Netflix has been removed, it will avoid this problem. In addition, it received a $2.8 billion termination fee for its troubles. Of course, this is not a recurring source of revenue. Still, it’s worth noting that it accounted for about 23% of the company’s fourth-quarter sales.
This must be weighed against the opportunity cost that Netflix will incur as a result of losing this acquisition. As the company’s management put it, “This deal has always been a ‘nice to have’ at a reasonable price, not a ‘must have’ at any price.”
