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Walt Disney ( DIS ) could solve a couple of problems if it acquired streaming video leader Netflix ( NFLX ), maverick Wall Street analyst Richard Greenfield said Friday in a blog post. Disney CEO Bob Iger is facing two big concerns: succession planning and the erosion of its ABC and ESPN broadcast businesses, Greenfield said. Iger is scheduled to retire in 2018, but he is without an heir apparent after the surprise departure this week of Chief Operating Officer Thomas Skaggs. Meanwhile, the company’s cable and broadcast businesses are facing a loss of viewers who are shifting more to on-demand Internet video services like Netflix. ESPN in particular is in trouble because it overpaid for NBA and other sports broadcast licenses before subscriber losses from cord-cutting became apparent, Greenfield said. Acquiring Netflix would give Disney a foothold in on-demand video distribution and a future leader in Netflix CEO Reed Hastings, Greenfield said. “Netflix is already a great friend of Disney,” Greenfield said. “In fact, Iger has repeatedly acknowledged how they are in part responsible for Netflix’s success. … Disney continues to sell more and more content to Netflix spanning movies and television series, while at the same time struggling to get their own direct-to-consumer content business off the ground in the U.K.” Netflix wouldn’t come cheap. The firm has a market capitalization of $44 billion vs. $157 billion for Disney. And Greenfield wonders whether Disney’s board would make such a bold acquisition. “We doubt Disney’s board comprehends just how much trouble their broadcast/cable network assets are facing to seek a transaction so near-term dilutive as Netflix, especially given the incredible success they are having contentwise in 2016,” he said. If Disney acquired Netflix, it could offer subscribers a bundle of on-demand video from Netflix and live sports from ESPN. “Combining Disney and Netflix effectively re-creates 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,” he said. In midday trading in the stock market today , Disney was down a fraction, near 96, and Netflix was down more than 1%, near 103. Scalper1 News
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