Netflix surpasses Disney as No. 1 entertainment company — for now
Netflix not only streams The Crown but also is poised to wear one — as the most valued U.S. entertainment company.
The Internet TV company got a coronation this week when its market capitalization surpassed that of the Walt Disney Co.
Netflix’s market value after Friday’s close was $152.7 billion, edging past Disney’s $152.3 billion.
Netflix stock, which closed Friday at $351.29 a share, has risen 83% so far this year, while Disney’s shares have dropped 5%.
The Nasdaq composite index has risen 6%.
Helping drive Netflix’s success: an aggressive recruitment strategy that has included the signing of beloved creators such as Shonda Rhimes (Scandal) and Robert Kirkman (The
Walking Dead) and comedians Dave Chappelle and Jerry Seinfeld. The most recent recruits: Barack and Michelle Obama, for a deal to produce films and TV series.
Disney and Comcast appear ready to engage in a bidding war for 21st Century Fox’s movie and TV studios and other assets that include a 30% share in streaming service Hulu.
This week, Comcast said it was preparing — but wasn’t certain to make — an all-cash offer to outbid Disney’s $52.4 billion bid that was announced in December and approved by Fox’s board.
That deal is crucial to Disney’s strategy to take on Netflix in the streaming business, with its own exclusive Disney movie and TV service expected to launch late next year.
Netflix could have a fruitful reign. Its value, with shows such as Stranger
Things and Jessica Jones, has grown among subscribers, with a majority of its customers willing to pay higher monthly fees to keep the service.
Nearly two-thirds of subscribers (64%) said they would not cancel Netflix until it reaches a price of more than $15 a month, according to a survey by Piper Jaffray & Co., senior research analyst Michael Olson said in a recent note to investors.
About one-fourth (23%) said they wouldn’t cancel until the price surpassed $20 monthly, and 5% said they would remain until the price went well above $20 a month.
Olson, who set a target price of $328.53 for Netflix shares, said the company will face “increasing competition and unforeseen hurdles, but we think Netflix has reached escape velocity. As the consumer content dollar shifts from traditional broadcast to Internet delivery, we believe the market will support multiple large players, with Netflix leading the way.”