Disney-Fox Combination Would Create Formidable Rival For Netflix

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Internet television network Netflix ( NFLX ) has gotten so big in streaming video that it would take a company with deep resources to give it a run for its money.

Enter the rumored merger of Walt Disney ( DIS ) and 21st Century Fox ( FOXA ) assets.

Disney reportedly is interested in acquiring certain entertainment assets from 21st Century Fox, including movie studio Twentieth Century Fox, cable networks FX and National Geographic, as well as Fox's stake in UK-based Sky and India's Star TV. Fox would keep its sports, news and broadcast networks, according to media reports.

CNBC said Tuesday that a purchase agreement worth about $60 billion could be announced as soon as next week.

"The acquisition of the Fox entertainment assets and a controlling stake of Hulu would make Disney a much more formidable and dangerous competitor down the road on streaming," GBH Insights analyst Daniel Ives said in a report Thursday.

The addition of the Fox assets would create a "content rich competitor" to Netflix as Disney prepares to launch a direct-to-consumer streaming video service in 2019, Ives said.

"While there are clearly vast synergies around the box office/advertising by combining Fox's movie and television studio businesses with Disney's vast entertainment assets, the core underlying driver for this deal in our opinion is the impending battle royale for content and streaming services vs. the Netflix machine," he said.

IBD'S TAKE: Netflix stock has an IBD Composite Rating of 85, meaning it has outperformed 85% of stocks in key metrics over the past 12 months. For more analysis on Netflix, visit the IBD Stock Checkup .

Netflix now competes with Amazon.com 's ( AMZN ) Amazon Prime Video, Time Warner 's ( TWX ) HBO and others in on-demand subscription video. Apple (AAPL) also is gearing up to enter the market.

"With more consumer dollars shifting away from traditional cable with cord cutting and toward streaming delivery, we believe the Disney strategic move to acquire these (Fox) assets would significantly beef up its streaming distribution/content services slated for 2019 and put the company on the path as a major streaming disrupter and market share gainer if it executes successfully," Ives said.

Netflix is the clear market leader in subscription streaming video. It ended the September quarter with 109.25 million streaming subscribers worldwide, including 52.77 million in the U.S. and 56.48 million in international markets.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Stocks
Referenced Symbols: NFLX , DIS , FOXA , AMZN ,

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