Wall Street rumor: Is Disney interested in bringing Netflix into the fold?

Shares in Netflix stock have been climbing of late in response to rumors that Disney may be interested in purchasing the streaming video giant. Netflix and the House of Mouse have had a cozy relationship for some time, largely centering around the streaming company’s use of various Marvel Comics franchises in its hunt for binge-watching domination.

This is not the first rumored acquisition by Disney in recent weeks, with simultaneous Wall Street scuttlebutt that the company may also be interested in a buyout of Twitter.

The Netflix acquisition rumor was recently corroborated by an analyst at Robert W. Baird & Co named William Power, who wrote, “Regarding recent M&A rumors, whether Disney, Apple, or someone else, Netflix could become a target.”

A move to purchase shares in a heavy-hitting streaming video company would not be a first for the Walt Disney Corporation; Disney currently owns 30 percent of Hulu and recently spent $1 billion to buy a third of Major League Baseball’s Advanced Media Tech division.

With such a big stake in the streaming marketplace, whether or not a deal with Netflix would fly through regulatory hurdles remains to be seen. That, and a Disney-owned-Netflix would have even more trouble than the company presently does securing titles from rival movie studios.

Disney executives may also be reticent to purchase the company based on the fact that it trades so far beyond earnings. Netflix’s price-to-earnings ratio hovers around 320, which would mean a major hit to Disney’s balance sheets should a buyout occur.

There are still reasons to believe this deal could happen. With the streaming giant creating more and more original content, its reliance on outside material is steadily declining and the speedy addition of big-money Disney franchises like Star Wars could not possibly hurt the service. Plus, Disney has always been at the forefront of streaming video and a move further into that field would not seem off-base for the company or its investors.

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