After signs of growth during the first half of 2012, Netflix
) is trading down again,having dropped more than 14 percent this
afternoon. With each decline, the company inches closer to
takeover territory. Many large corporations have been rumored to
be interested in acquiring Netflix, including Apple (NASDAQ:
). Before that happens, there is one company that should step up
and acquire Netflix as quickly as possible: Hulu.
Hulu is already the leader of online television. The site
streams more new and classic shows than any other service, and
with a growing number of subscribers (and, for better or worse, a
growing number of ads), Hulu is doing very well.
Still, the company's mission is far from over. Hulu needs to
increase its movie library, as well as the number of subscribers
who use its premium service. By acquiring Netflix, Hulu would get
an instant boost in both regards.
As a young and relatively small company, investors might not
think that Hulu can afford to buy Netflix, which has a market cap
of $3.2 billion. Hulu luckily does not have to worry about money,
as its owners -- Fox, a subsidiary of News Corp (NASDAQ:
); NBC, a subsidiary of Comcast (NASDAQ:
); and ABC, a subsidiary of Disney (NYSE:
) -- have enough cash on hand to make the deal happen.
In theory, these companies should have no trouble getting the
content they need to turn Hulu in the world's biggest online
streaming site. They are content producers, after all -- not just
media conglomerates. But Hulu still lacks a solid database of
By acquiring Netflix, Comcast could potentially use it to
boost its own online and cable video ventures. While the existing
content deals would remain with Netflix, Comcast could use Hulu
to renegotiate the terms of those contracts. At the very least,
it would give Hulu greater power in acquiring future films and TV
In time, this merger could also reduce the price of new
content deals. Earlier this year, Hulu and Netflix spent good
money to acquire films from Miramax and shows from The CW. If the
two firms were under one roof, they could share content across
both platforms and eliminate redundancies.
(c) 2012 Benzinga.com. Benzinga does not provide investment
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