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Netflix to Hollywood: M&A won't save you

Jan 24, 2024
Illustration of the Netflix logo with ON AIR lighting up in the middle stroke of the N

Illustration: Natalie Peeples/Axios

Fresh off its WWE deal and strong earnings, Netflix went full heel by telling its competition it's not interested in buying their dying legacy assets.

Why it matters: Netflix is frequently mentioned as a potential suitor for Hollywood studios as the industry contracts. The company's latest shareholder letter threw cold water on that idea.

Details: Netflix stated plainly: "We're not interested in acquiring linear assets."

  • The company doesn't see M&A doing much for the industry, either: "Nor do we believe that further M&A among traditional entertainment companies will materially change the competitive environment given all the consolidation that has already happened over the last decade."
  • Netflix's name has come up in recent years as a potential acquirer of studios that are M&A targets, including Paramount and Lionsgate.

The big picture: It's been almost two years since The Great Netflix Correction that stunted the streaming wars, yet Netflix is the only one that seems to have come out stronger on the other side.

  • The company had its best-ever fourth quarter for subscriber growth, adding 13 million, handily beating analyst expectations of 8 million. It now has more than 260 million global subs.
  • Netflix is still the only major streaming company that's profitable.
  • Data shows Netflix consistently beating its streaming rivals for the past year on low churn rates and the number of subscriber cancellations or subscription lapses.
  • Netflix shares spiked more than 13% in Wednesday morning trading.

The bottom line: Netflix wants to beat its Hollywood competitors, not save them.

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