What Does The Disney-Fox Deal Mean For Netflix?

One of the more pressing questions on investors minds after Walt Disney Co DIS confirmed its intentions to acquire media assets from Twenty-First Century Fox Inc FOXA is what impact will the tie-up have on Netflix, Inc. NFLX

The Analyst

Buckingham Research Group's Matthew Harrigan maintains a Buy rating on Netflix's stock with an unchanged $235 price target.

The Thesis

Disney's tie-up will likely make Disney a "co-winner" in the global internet TV space, Harrigan said in a note. However, when factoring in Netflix's AI technology and expertise in personalization, Disney will likely end up being a "distant second" winner in the streaming video space.Netflix's "sometimes edgy" content gives it another key advantage on top of its first mover advantage, pricing power and value delivery.

"Disney is already likely the 'old' media name dominantly positioned for direct-to-consumer with its 2019 launch- for both entertainment and sports - where Netflix is not now participating," Harrigan said.

Separately, notable billionaire tech investor Mark Cuban shared similar sentiment with Benzinga. When asked if the deal makes Disney a legitimate competitor to Netflix he answered: "'No, but it makes it a legit compliment."

Net Neutrality

Netflix reaffirmed its commitment to net neutrality after the FCC voted to remove it, but the impact to Netflix will be zero, Harrigan said.

"Netflix is now so powerful (and popular) that it is a winner under almost any regulatory framework and will not have issues with speed throttling," he said.

Price Action

Shares of Netflix were trading nearly flat Friday morning.

Related Links:

What The FCC's Net Neutrality Repeal Means For You

The Disney-Fox Deal: With Great Power Comes Great Regulatory Risk

Image credit: Matthew Keys, Flickr