Satya Nadella keep thinking big. The managing director of Microsoft in fact, it is buying new companies at an impressive rate and, according to some rumors, it seems that it also wants to buy Netflix. Let’s find out all the details together keeping in mind that the information below have not yet been confirmed from official sources.
Is Microsoft Thinking About Buying Netflix?
Since being promoted in 2014, Nadella has embarked on a series of expensive purchases. It started with the acquisition from $2.5 billion of the company behind the successful game Minecraft. Later, Microsoft bought LinkedIn for $26 billion and the developer of speech recognition and artificial intelligence software Nuance per 20 billion dollars. Activision Blizzardas we know, was by far the largest lens among those disclosed, with 69 billion dollars.
Microsoft is busy battling US trustbusters for the right to acquire the Call of Duty creator. Furthermore, the purchase has raised regulatory concerns regarding the dominant position on the market. In fact, many people wondered if Call of Duty would become a Microsoft exclusive.
Even if Nadella were to lose the video game company for the sake of competition, he would still own Netflix would have a strategic sense and it would probably be easier to sell to Washington and Brussels.
The two companies are already closely aligned. Netflix chose Microsoft as advertising partner for a new subscription service supported by advertising. The president of Microsoft, Brad Smithalso sits in the board of directors on Netflix.
Money and the market
Netflix has big plans in the video game industry. In 2022, the company headed by Reed Hastings acquired the developer Spry Fox, its sixth in-house studio. Entry into the Microsoft empire would strengthen these ambitions. It’s not hard to imagine a marriage between streaming TV and gaming.
With a market value 13 times that of Netflixin early December, the company from $1.8 trillion could afford Netflix. A 30% premium would nearly value Netflix’s feat 190 billion dollars. However, it would be hard to find significant cost savings. And after taxing glthe 8 billion dollars of operating profit that analysts expect for Netflix in 2024, the implied return on investment would be only half of its weighted average cost of capital of the8%according to Morningstar analysts.
Nadella has already challenged this financial logic. And, if nothing else, he’s shown a willingness to be a bold deal-maker. On this basis, it is therefore easy to believe that Microsoft could set its sights on Netflix. At the moment though neither company has denied or confirmed the information we have reported to you therefore, as always, we remind you to take the information with a grain of salt.