Netflix could be eyeing a big acquisition like Paramount or another studio thanks in part to the big runup in its stock that could enable a pivot to growth through mergers and acquisitions, according to Business Insider.
The report Thursday noted that Netflix has made strategic purchases in the past, notably in animation — it bought Australian animation studio Animal Logic last year — and its games business, including its buys of “Oxenfree” maker Night School in 2021 and Spry Fox in 2022. It also bought the Roald Dahl Story Company in 2021, with the intent to use the “Willy Wonka” author’s titles to deepen its original programming.
But now, for the first time since its founding 25 years ago, Netflix is looking for M&A to play a bigger role, the report said.
Among the catalysts are the need to find new avenues for boosting subscribers, even as it separately efforts to sign up users who were avoiding payment by sharing passwords to access the streaming giant’s service. The company reported a net gain of just 1.75 million subscribers in the first three months of the year. The password sharing crackdown has reportedly been a positive, with new signups jumping to a point that beat out the surge it saw during the early days of the COVID-19 pandemic.
A banker who’s had conversations with the company told the outlet: “They’re open for business — that’s a new evolution.”
The streaming giant said it had more than $6.7 billion in cash at the end of the first quarter. And with shares soaring, Netflix has the powder needed to make some deals. The stock has gained roughly 50% since the start of the year, trading Thursday morning at $422.95, down a fraction in a bumpy market. With the runup, Netflix’s market capitalization is nearly $190 billion.
“Some company watchers point out that Netflix now has stock that could make sense to use as currency for a big acquisition like Paramount or another studio,” the report said. Netflix could also look at gaming, advertising or sports companies, it added.
Paramount Global has been seen as an acquisition target since the merger of Viacom and CBS in 2019 thanks to its relatively low market cap — it’s now $10.22 billion, down from $26 billion at the time of the merger — and deep library of content.
Netflix reportedly held talks with Paramount Pictures in the past, but was interested only in that library and not the broadcast operation of CBS or its cable networks, which include Comedy Central, Showtime, MTV and VH1. Separately, Deadline reported Tuesday that Warner Bros. Discovery is offering some of its HBO library titles to Netflix.
Paramount Global CFO Naveen Chopra told investors earlier this month the company is “very open minded” about potential opportunities. “Whether Paramount is a seller of assets into consolidation or whether we are a consolidator of assets, we’ll have to see.”