Sun Valley 2022 could see acquisition of Netflix; Tim Cook expected

Sun Valley 2022 – a conference that has been described as a “billionaire summer camp” – includes Apple CEO Tim Cook among the guests. Cook and Apple Services Manager Eddy Cue attended last year’s event.

With heavy involvement from the media industry, one of the main focus should be the future of streaming video, with some speculating that Netflix could be an acquisition target for at least one of the companies present…

Background

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

Sun Valley, named after the Idaho town in which it takes place, is an opportunity for technology and media companies to privately discuss issues of common concern.

But the conference also has a reputation for spawning acquisitions. While discretion is the watchword of the event, a number of mergers and acquisitions were reportedly prompted by discussions between CEOs at the event. Offers related to previous Sun Valley Gatherings include:

  • The purchase of Jeff Bezos by the founder of Amazon The Washington Post
  • Warner Media/Discovery merger
  • Proposed takeover of MGM by Amazon
  • Acquisition by Disney of CapitalCities/ABC

Netflix a possible acquisition target

Deadline reports that this year, Netflix is ​​seen as a potential target.

For guests Reed Hastings and Netflix co-CEO Ted Sarandos, the year since Allen & Co. 2021 has made a huge difference. Its stock has fallen 70% year-to-date after losing 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 change.

An independent Netflix “has disappeared”, predicted a financier. It’s a very valuable platform, but “more of a growth story”. Hastings and Sarandos ‘didn’t manage Street’s expectations’ and lost a few hundred million dollars’ in market capitalization in one fell swoop, he said, referring to his last post-earnings video call when the co-chiefs discussed the lack of subscribers.

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

It’s also around this time that buyers might consider rushing to pick up WBD. The structure of this deal would result in a heavy tax penalty for any purchaser within two years of closing.

More generally, the future of the video streaming business should be one of the main topics of discussion at Sun Valley.

The Netflix effect has spread to other streamers’ stocks as investors question the economics of the high-cost, low-profit activity. Meanwhile, pent-up demand, the Russian-Ukrainian war and ongoing Covid-related supply chain issues have sparked sky-high inflation. Corresponding interest rate hikes by the Federal Reserve risk provoking a recession, a fear that has hit advertising and could spill over to other areas of entertainment.

Tim Cook guest again

Apple CEO Tim Cook would again be among the conference attendees.

Shari Redstone, non-executive chairman and majority shareholder of Paramount, will return. CEO Bob Bakish has been invited but cannot come. Fox CEO Lachlan Murdoch and COO John Nallen are confirmed. The same goes for Ken Yoshida, CEO of Sony Group Corp., and Jim Ryan, head of PlayStation. Casey Wasserman and Mike Fries too.

Not all guests are necessarily present. But Rupert Murdoch is a regular and Bob Chapek – a new three-year contract now underway – was there last year. Guests also include tech CEOs, including 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 presence and Netflix being seen as an acquisition target will inevitably lead to speculation that Apple will buy the streaming media giant. This would instantly make Apple TV+ the biggest name in the streaming video market.

So far, however, there’s been no indication that Apple has any interest. Apple TV+’s strategy favored quality over quantity, with the Cupertino company focusing on original content. It’s also a very low-margin business, which would be a surprising buy for a company with margins around 40%. Stranger things have happened, but any speculation is a little wilder.

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

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