Netflix will be next on Microsoft’s shopping list
NEW YORK, Dec 20 (Reuters Breakingviews) — Satya Nadella keeps thinking bigger. Microsoft’s (MSFT.O) chief executive has been buying new businesses at an impressive clip. Look for him to add Netflix (NFLX.O) to the list in 2023.
Since his 2014 promotion into the technology titan’s corner office, Nadella has embarked on a pricey shopping spree. It started with the $2.5 billion acquisition of the company behind the hit game Minecraft. Later, Microsoft bought LinkedIn for $26 billion and the speech recognition and artificial intelligence software developer Nuance for $20 billion. Activision Blizzard (ATVI.O) was by far the largest disclosed target, at $69 billion.
Microsoft is busy fighting U.S. trustbusters for the right to absorb the “Call of Duty” creator. Putting it under the same roof as gaming console Xbox has led to regulatory concerns about market dominance. Even if Nadella loses out on the video-game company for competition reasons, however, owning Netflix would make strategic sense and probably be an easier sell in Washington and Brussels.
The two companies are already closely aligned. Netflix chose Microsoft as its advertising partner for a new advertising-supported subscription service. Microsoft President Brad Smith also sits on the Netflix board. Part of the rationale for a deal is that Microsoft wants to offer a video-game streaming service over multiple devices.
Netflix has its own big plans in gaming. In 2022, the company co-led by Reed Hastings snapped up developer Spry Fox, its sixth in-house studio. Becoming part of the Microsoft empire would supercharge those ambitions. A bundle with streaming TV and games together is not hard to fathom.
With a market value 13 times that of Netflix, as of early December, $1.8 trillion Microsoft can afford Netflix.
A 30% premium would value the Netflix enterprise at nearly $190 billion. Significant cost savings would be hard to find, however. And after taxing the $8 billion of operating profit that analysts project for Netflix in 2024, the implied return on investment would only be half its 8% weighted average cost of capital, per Morningstar analysts.
Nadella has defied such back-of-the-envelope financial logic before. And if nothing else, he has shown a willingness to be a bold dealmaker. On that basis, it’s easy to believe Microsoft will set its sights on Netflix.
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(This is a Breakingviews prediction for 2023. To see more of our predictions, click here.)
CONTEXT NEWS
The U.S. Federal Trade Commission on Dec. 8 sued to block Microsoft’s $69 billion acquisition of video-game developer Activision Blizzard, arguing that the combination would hurt consumers because it would give the software company an unfair edge against competitors of its Xbox gaming consoles and cloud-gaming business.
Editing by Jeffrey Goldfarb, Katrina Hamlina and Amanda Gomez
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Harry and Meghan’s next Netflix docuseries will drop on New Year’s Eve
The upcoming docuseries is inspired by Nelson Mandela.
Netflix
London
CNN
—
Netflix has announced its next project with Prince Harry and Meghan, Duchess of Sussex – a Nelson Mandela-inspired docuseries titled “Live to Lead.”
Dropping December 31, the series will feature interviews with several familiar and famous faces, from New Zealand Prime Minister Jacinda Ardern and South African rugby player Siya Kolisi, to the late United States Supreme Court justice Ruth Bader Ginsburg.
In a statement, the streaming giant summarized the seven-part series as “extraordinary” leaders reflecting on their lives, while highlighting the “fundamental values, daily disciplines and guiding principles that leaders employ to motivate others and create meaningful change.”
“Live to Lead” is executive produced by Harry and Meghan in association with the Nelson Mandela Foundation, it said.
Geoff Blackwell, the series’ creator and director, said in the statement that he and co-executive producer Ruth Hobday wanted to “honor Mandela’s values by surfacing the stories of leaders who distinguish themselves through their moral courage, the conviction of their ideals and values, and their prioritization of others.
”
The low down on the second part of the Sussexes’ docuseries.
From Netflix
Jealousy, lies and backstabbing. Harry and Meghan point the finger in final Netflix episodes
A trailer for the series, released Monday, features both the subjects and the Sussexes, with Harry quoting Mandela as saying, “‘what counts in life is not the mere fact that we have lived,’” and Meghan concluding “it is what difference we have made to the lives of others that will determine the significance of the life we lead.”
Other interviewees include climate change activist Greta Thunberg, social justice campaigner Gloria Steinem, and anti-apartheid activist and former justice of the Constitutional Court of South Africa Albie Sachs.
This project follows the release of the eagerly anticipated docuseries “Harry & Meghan” on the streaming platform earlier this month.
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