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Disney Buying Netflix is Looking More Likely

house-of-cards-season-3-posterAbout a week ago it was reported that Disney and Netflix had started talks about a possible sale of Netflix. At the time it was looking like Disney was debating between buying Netflix and Twitter to help expand their brand into online streaming.

Now Bloomberg has reported that Disney is dropping their bid for Twitter over fears of their image being effected. In short Disney was worried about abusive behavior and less-than-family-friendly content on Twitter being linked to the Disney brand.

What Disney wanted from Twitter were the streaming rights Twitter recently acquired for content from the NFL, Pac-12, NBA, and many other services; however, it seems the traditional social media part of Twitter was the reason the deal fell apart.

The failure of the Twitter deal makes the Netflix option more real. Recently Disney announced to their investors that they see the future of movies and TV shows to be online. Buying Netflix helps them control how their content is released online because currently they are relying on services such as Netflix, Hulu, and Amazon to stream their content.

Both Disney and Netflix have declined to comment on how the talks are going but just the fact that they are declining to comment typically means the talks are going well. Typically companies only comment on such talks when they hope to use the comment to effect the end result of the talks.

Even if Netflix and Disney come to an agreement it will likely take some time to get approval from regulators; however, this could be a win-win for both companies. Netflix would get the money they need to keep making original content and Disney will get control of their digital content.

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12 Responses to Disney Buying Netflix is Looking More Likely

  1. Avatar
    Jack Astor October 19, 2016 at 6:57 am #

    I will gladly pay more to have access to the entire Disney catalog.

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    Tomasz Kucza October 19, 2016 at 9:27 am #

    That would give Disney even bigger monopoly… Although we could probably watch all Disney catalog on Netflix thanks to that.

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    Hex October 19, 2016 at 9:42 pm #

    Last week when you wrote the article Netflix was worth $45 billion dollars. Between then and now Netflix released their earnings announcement and their stock price when up 20%. They are now worth to $62 billion dollars. Disney would have to pay a premium to the Netflix shareholders so maybe $80 billion. Disney has about $15 billion in current assets in the corporation so I would not know where they would get the cash from. Netflix shareholders probably aren’t interested in Disney stock and Disney shareholders probably wouldn’t be interested in a stock deal either because it would just dilute them – cash is King. I don’t know where Disney would come up with the cash.

    • Avatar
      Cord Cutters News October 19, 2016 at 10:16 pm #

      Disney right now has a stock price of $91 and as of 2014 they had an estimated $95+ billion dollars on hand back when the stock price was $86.89. So Disney has enough money to pay the $80 billion dollars upfront in cash. Yet typically how these deals work is some cash up front and part of it will be giving Netflix owners stock in Disney. So they wouldn’t need to pay it all in cash but they could.


      • Avatar
        Hex October 19, 2016 at 11:15 pm #

        That $95 billion includes treasury stock (so stock that is not traded and has not been issued). For Disney to realize the value of it they would have to sell those shares which would dilute their current owners because it would put more shared in the market. Their balance sheet shows $15 billion in current assets:

        As the article you referenced says, if Disney thinks that their current share price is high, they could sell some of those shares and realize the value but with a P/E ratio of 16.52 it would be hard to believe they would think the shares are currently overpriced. They could still sell the shares but doing that will decrease the value of the shares that are currently out there and to sell enough to pull in Netflix kind of dollars would be a HUGE number of shares to put in the market.

        • Avatar
          Hex October 19, 2016 at 11:20 pm #

          Now, I will say that Netflix’s shares are way over priced with a P/E ratio of 327 so if they are worried about their future exiting with the price way over inflated like it is not would be a good time. BUT why would Disney want to pay a premium for a stock that is already over inflated.

          • Avatar
            Hex October 19, 2016 at 11:32 pm #

            But think about this as an interesting option – if Netflix is for sale it would probably make more sense for Amazon or Apple to buy them. Amazon has a market cap of $380 + billion and they have more cash on hand than Disney does. They could, theoretically, swing a Netflix purchase more easily than Disney could.

            Apple is twice the size of Amazon and has the cash to do it. And, they have certainly shown interested in getting into the game in a big way.

            All of this would hinge on Netflix being for sale in the first place but if they are it could be interesting if those players are all going for it.

  4. Avatar
    craig October 21, 2016 at 10:31 am #

    Plus Netflix would have more capital to spend since Disney doesn’t need to pay itself to put its content on Netflix

  5. Avatar
    Cenarl November 14, 2016 at 11:53 pm #

    If disney is worried so much about twitter’s content and their reputation, I don’t want them any where near Netflix and worrying about their content like Marco Polo.