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Sun Valley 2022 could see Netflix acquisition; Tim Cook expected


Sun Valley 2022 – a conference which has been described as ‘summer camp for billionaires’ – includes Apple CEO Tim Cook among the invitees. Both Cook and Apple Services head Eddy Cue attended last year’s event.

With a heavy attendance from the media sector, one key focus is expected to be the future of streaming video, with some speculating that Netflix could be an acquisition target for at least one of the companies attending…

Background

The Sun Valley Conference is an annual event hosted by a small but influential investment company, Allen & Co. The firm has been run by the same company since it was founded in 1922, and was an underwriter for both Google and Facebook when they went public, as well as an advisor for Facebook’s purchase of WhatsApp.

Sun Valley, named after the Idaho town in which it takes place, is an opportunity for tech and media companies to privately discuss matters of mutual interest.

But the conference also has a reputation for giving birth to acquisitions. While discretion is the watchword of the event, a number of mergers and acquisitions are rumored to have been prompted by discussions between CEOs at the event. Deals linked to previous Sun Valley get-togethers include:

  • Amazon founder Jeff Bezos’ purchase of The Washington Post
  • Warner Media/Discovery merger
  • Amazon’s planned takeover of MGM
  • Disney’s acquisition of CapitalCities/ABC

Netflix a possible acquisition target

Deadline reports that this year, Netflix is ​​believed to be a potential target.

For invitees Reed Hastings and Ted Sarandos, Netflix co-CEOs, the year since Allen & Co. 2021 has made a massive difference. Its stock plunged 70% from the start of the year after shedding subscribers last quarter for the first time, announcing it would lose more in the just-ended June quarter and suddenly unveiling plans to launch an ad-supported service even as it lays off staff . As a result, Netflix is ​​increasingly seen as a takeover target — an unusual shift.

An independent Netflix “is gone,” predicted one financier. It’s a very valuable platform but “not a growth story anymore.” Hastings and Sarandos “didn’t manage Street expectations” and in one fell swoop lost a couple hundred million dollars” of market cap, he said, referring to his latest post-earnings video call when the co-chiefs discussed the subscriber shortfall.

Over the next 18 months, “the environment will be clearer,” he said.

That’s also about when buyers could consider swooping in to acquire WBD. The structure of that deal would entail a hefty tax penalty for any acquirer within two years of closing.

More generally, the future of the streaming video business is expected to be one of the key discussion topics at Sun Valley.

The Netflix effect has spilled over to shares of other streamers as investors question the economics of the high cost, still slim profit business. Meanwhile, pent up demand, the Russia-Ukraine war and lingering Covid-related supply chain issues have triggered sky-high inflation. Corresponding interest rate hikes by the Federal Reserve risk recession, a fear that has hit advertising and may bleed into other areas of entertainment.

Tim Cook again invited

Apple CEO Tim Cook is again reported to be among those attending the conference.

Paramount’s non-executive chair and controlling shareholder Shari Redstone will be back. CEO Bob Bakish was invited but couldn’t make it. Fox CEO Lachlan Murdoch and COO John Nallen are confirmed. So is Sony Group Corp. CEO Ken Yoshida and Jim Ryan, head of PlayStation. Casey Wasserman and Mike Fries too.

Not all invitees necessarily attend. But Rupert Murdoch is a regular and Bob Chapek — a new three-year contract now in hand — was there last year. Invitees also include tech CEOs, among them Elon Musk, Apple’s Tim Cook, Meta’s Mark Zuckerberg, Amazon’s Andy Jassy and Alphabet’s Sundar Pichai.

9to5Mac’s Take on Sun Valley Rumors

The combination of Cook’s attendance and Netflix being seen as an acquisition target will inevitably lead to speculation about Apple buying the streaming media giant. This would instantly make Apple TV+ the biggest name in the streaming video market.

So far, however, there has been little sign that Apple has any interest. The strategy of Apple TV+ has been quality over quantity, with the Cupertino company focusing on original content. It’s also a very low-margin business, which would be a surprising purchase for a company whose margins nudge close to 40%. Stranger things have happened, but any speculation is somewhat on the wilder side.

Photo (cropped): Thomas Hawk (CC BY-NC 2.0)

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Naveen Kumar

Friendly communicator. Music maven. Explorer. Pop culture trailblazer. Social media practitioner.

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