Netflix Not Interested in Pursuing Linear Assets, But Will It Go After Other Merger Opportunities?
Observers can likely count Netflix out when it comes to pursuit of legacy media companies like Paramount. What about BET+ or AMC+?
Speculation over the future of Paramount was reignited this week, as news spread that it would lay off hundreds of workers across the company next month. There have been several parties with rumored interest in acquiring a controlling stake in Paramount Global’s parent company National Amusements, Inc., but according to information shared by Netflix officials this week, analysts shouldn’t expect the company to make any moves toward acquiring Paramount.
- Netflix stated flatly this week that it has no interest in acquiring any linear TV assets.
- That position would discount Netflix from acquiring Paramount Global, NBCUniversal, ESPN, or any other company with TV channels.
- The door still could be open for Netflix to pursue assets like AMC+, BET+, and other streaming entities.
Why is Netflix Uninterested in Linear Assets?
Cord cutting in the United States has grown from a trend to an epidemic, at least for traditional media companies. One study published in November showed that traditional pay-TV companies lost 1.8 million customers in the third quarter of 2023 alone, and even some of the longest-standing media companies were feeling pressure to do something with their faltering linear channels.
However, Netflix, which contributed to a good portion of that cord-cutting, has no interest in adding any linear TV channels into its mix. The company confirmed its stance in a shareholder letter released on Tuesday, which states flatly, “We’re not interested in acquiring linear assets.”
Those words were reinforced by Netflix co-CEO Ted Sarandos, who told analysts during his conference call to discuss the company’s fourth quarter 2023 earnings that, “We’re not interested in some of the big linear assets that may or may not be available.”
Paramount is the most-discussed company with linear assets being discussed in merger and acquisition talks these days. The company owns CBS, Paramount Network, Showtime, Nickelodeon, and a host of other TV channels, and while Warner Bros. Discovery, Skydance, and other companies might continue to poke around a controlling stake in Paramount Global, it seems Netflix can officially be counted out of any future speculation surrounding the company.
Is Netflix Closed for Business in 2024?
When asked about the potential for mergers and acquisitions outside the context of linear assets during the earnings call, Sarandos was less explicit. He referenced the company’s low debt load and its preference to keep it that way but didn’t count out the possibility that it would pursue assets it saw as a good fit.
“We’re not going to speculate on kind of potential M&A activity,” the CEO said. “But as you know, our historical bias is to build and not buy We try to be very responsible in terms of our capital allocation philosophy … and we’ll look at selective accelerators to that organic growth.”
That ambiguity leaves Netflix plenty of room in which to operate. Perhaps Netflix would contact Paramount about acquiring the rights to BET+ and its library of titles, which the company is exploring selling once again. AMC+ has big-name franchises like “The Walking Dead” in its arsenal, but its small subscriber base and the difficulty it has had in gaining scale could leave AMC open to shuttering its service and selling its streaming rights.
Netflix also has a golden opportunity to acquire Lionsgate’s TV and movie studio, as well as its video library. Those assets could potentially be sold off by Lionsgate, which is separating its studio from its streaming service/cable bundle STARZ. While the two companies will work independently, they are expected to maintain a familial relationship. However, if Netflix was to be serious interested in acquiring Lionsgate content, like the “John Wick” franchise, it certainly would have th money to do so, especially now that Lionsgate has separated itself from its linear TV operations.
In short, Netflix has options if it wants to open its purse strings and make a big acquisition in 2024. However, the world’s largest streaming service won’t be pursuing any linear TV assets.
Netflix
Netflix is a subscription video streaming service that includes on-demand access to 3,000+ movies, 2,000+ TV Shows, and Netflix Originals like Stranger Things, Squid Game, The Crown, Tiger King, and Bridgerton. They are constantly adding new shows and movies. Some of their Academy Award-winning exclusives include Roma, Marriage Story, Mank, and Ma Rainey’s Black Bottom.