Why Hulu Should Buy Netflix
With each decline, the company inches closer to takeover territory.
Many large corporations have been rumored to be interested in acquiring Netflix, including Apple (NASDAQ:AAPL). Before that happens, there is one company that should step up and acquire Netflix as quickly as possible: Hulu.
Hulu is already the leader of online television. The site streams more new and classic shows than any other service, and with a growing number of subscribers (and, for better or worse, a growing number of ads), Hulu is doing very well.
Still, the company's mission is far from over. Hulu needs to increase its movie library, as well as the number of subscribers who use its premium service. By acquiring Netflix, Hulu would get an instant boost in both regards.
As a young and relatively small company, investors might not think that Hulu can afford to buy Netflix, which has a market cap of $3.2 billion. Luckily, Hulu does not have to worry about money, as its owners -- Fox, a subsidiary of News Corp (NASDAQ: NWS) (NASDAQ: NWSA); NBC, a subsidiary of Comcast (NASDAQ:CMCSA); and ABC, a subsidiary of Disney (NYSE:DIS) -- have enough cash on hand to make the deal happen.
In theory, these companies should have no trouble getting the content they need to turn Hulu in the world's biggest online streaming site. They are content producers, after all -- not just media conglomerates. But Hulu still lacks a solid database of popular films.
By acquiring Netflix, Comcast could potentially use it to boost its own online and cable video ventures. While the existing content deals would remain with Netflix, Comcast could use Hulu to renegotiate the terms of those contracts. At the very least, it would give Hulu greater power in acquiring future films and TV shows.
In time, this merger could also reduce the price of new content deals. Earlier this year, Hulu and Netflix spent good money to acquire films from Miramax and shows from The CW. If the two firms were under one roof, they could share content across both platforms and eliminate redundancies.
Below, find some more great ETF and market content from Benzinga:
Oil Extends Slide as Inventories Soar
What's Wrong With Apple?
Digging Through the Numbers, Facebook's Quarter Wasn't That Great
Benzinga Pro covers this and all market news in real time. Get your free trial here.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.