Netflix hints M&A could have a starring role

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Netflix and Prime video logos are seen on a TV remote controller in this illustration taken January 20, 2022.

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NEW YORK, Jan 28 (Reuters Breakingviews) - Netflix bosses Reed Hastings and Ted Sarandos could be turning into dealmakers. The $171 billion video-streaming group filed its annual report on Thursday warning of possible “costs and challenges associated with acquisitions and investments.” Taken with the duo’s recent comments about building out video games – not to mention the buzz created by Microsoft’s (MSFT.O) $69 billion deal with Activision Blizzard (ATVI.O) – it suggests Netflix may be ready to go shopping read more .

It would be a shift in strategy. Netflix has completed only 13 acquisitions since 2013 with an average size of $110 million, according to Refinitiv data. But a slowdown

in subscriber growth and stiff competition may be reasons driving a change of heart.

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Even though Netflix’s shares have fallen about 45% from their November high, its stock is still a valuable currency. With an enterprise value more than 20 times estimated EBITDA for 2022, Netflix is more highly priced than, say, Meta Platforms (FB.O). Interest from investor Bill Ackman, whose Pershing Square Capital invested over $1 billion, is a vote of confidence, too. Netflix's next big series could be about mergers and acquisitions. (By Jennifer Saba)

(The author is a Reuters Breakingviews columnist. The opinions expressed are their own.)

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Editing by Richard Beales and Pranav Kiran

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