Disney and Netflix don’t look good together

Since the time rumors started doing the rounds about Disney’s possible acquisition of Netflix, the market is abuzz with all kind of theories about possible repercussions of such a takeover.

Firstly and largely, it's going to be a big cultural clash between two different organizations. Netflix has climbed up the ladder on the back of original content like Orange Is The New Black which won’t fit in Disney’s world.

In all likelihood, Reed Hastings, Netflix’s CEO won’t stay post the merger and then it would be a slow death for Netflix value and culture.

At Disney being told what to do and what content to create would kill the essence of Netflix. Though the deal would be beneficial for Disney as it gains access to Netflix’s online streaming platform but pushing its own content across it could lead to many letting go off their subscription.

Another reason is the unprofitability of the online streaming industry. With cut-throat competition and high costs of producing original content, the profit margins aren’t great in the sector.

Netflix’s negative cash flow is another concern all together which also makes one wonder how Disney could earn a positive net present value (NPV) on the deal.

But there are others who see perfect dovetailing of the two companies in the possible deal. According to these analysts, ESPN parent company Disney’s further foray into streaming video, especially in sports content, makes perfect sense.

Recently, Albert Fried analyst Richard Tullo justified Disney’s interest in Twitter on similar grounds. “On the surface, a deal makes no sense, but if you think streaming video is potentially disruptive to live sports then there is a strategic case to be made,” he said.