Could Netflix Make A Move After Comcast’s Breakup? Morningstar Sees The Possibility

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The firm said acquiring NBCU’s assets would result in material changes to the streaming giant’s financial outlook.

  • Morningstar sees many potential suitors for an independent NBCUniversal, including Apple and Amazon.
  • NBCU owns one of the world’s five major movie studios, along with its associated franchises, theme parks, and a domestic streaming service that includes sports rights to popular events.
  • The firm has estimated a $60 billion price tag for NBCU’s assets.

Morningstar cheered Comcast’s (CMCSA) announcement to separate its media and technology businesses, as it believes this will unlock maximum value for both to be public entities.

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The firm said in a recent note that separating them will allow each to attract suitors, pursue asset sales, and make striking partnerships easier than as a combined firm. “We applaud this move, as we’ve long held that combining the cable broadband and media businesses provides minimal operational benefits,” Morningstar said in its note.

CMCSA shares traded marginally higher in Tuesday’s premarket, following its best day in more than a decade, and were among the top ten trending tickers on Stocktwits.

Coming Into The Picture: Amazon, Apple, And Netflix

Morningstar sees many potential suitors for an independent NBCUniversal once the separation takes effect by 2027. Analyst Matthew Dolgin believes companies that could be interested in NBCU’s assets include Apple (AAPL), Amazon (AMZN), and Netflix (NFLX), as they would gain access to one of the top five Hollywood studios, along with its associated franchises, theme parks, and a domestic streaming service with sports rights to popular events.

Dolgin believes that all three companies stand to benefit from NBCU, for which it has estimated a price tag of $60 billion. However, it expects Netflix’s financial outlook to change materially if such a deal materializes.

Netflix: The Biggest Benefactor From NBCU’s Assets

While Apple and Amazon could boost their content production and add subscribers to their respective streaming platforms with NBCU, the tech giants have much bigger priorities than reinforcing their entertainment businesses.

That’s not the case for streaming giant Netflix, argues Morningstar. The company could use NBCU’s theme parks, movie studio, and sports programming to spur additional growth, and the price tag should not deter Netflix, since it was willing to acquire Warner Bros. Discovery’s (WBD) streaming and studios unit in an $82.7 billion deal.

Even though the deal would add linear networks to Netflix’s portfolio, something that it has been uninterested in due to dwindling cable and broadcast viewing trends in the U.S., those are just two networks: NBC and Bravo. It could even divest them later if it wanted to, Morningstar said.

Even holding the networks should not be a burden, the firm said, since they have broadcast rights to the Olympics in the U.S. and Sunday Night Football, complementing Netflix’s strategy to carry notable sports events.

What Do Retail Traders Think About CMCSA And NFLX?

On Stocktwits, retail sentiment on CMCSA turned ‘bullish’ from ‘neutral’ over the last 24 hours, while it remained ‘bullish’ on NFLX.

CMCSA stock has declined more than 32%, while NFLX has fallen roughly 45% over the last 12 months, underperforming the S&P 500.

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