Satya Nadella keeps thinking bigger. Microsoft’s chief executive has been buying new businesses at an impressive clip. Look for him to add Netflix to the list in 2023. Reuters reports: […] The two companies are already closely aligned. Netflix chose Microsoft as its advertising partner for a new advertising-supported subscription service. Microsoft President Brad Smith also sits on the Netflix board. Part of the rationale for a deal is that Microsoft wants to offer a video-game streaming service over multiple devices. Netflix has its own big plans in gaming. In 2022, the company co-led by Reed Hastings snapped up developer Spry Fox, its sixth in-house studio. Becoming part of the Microsoft empire would supercharge those ambitions. A bundle with streaming TV and games together is not hard to fathom.

With a market value 13 times that of Netflix, as of early December, $1.8 trillion Microsoft can afford Netflix. A 30% premium would value the Netflix enterprise at nearly $190 billion. Significant cost savings would be hard to find, however. And after taxing the $8 billion of operating profit that analysts project for Netflix in 2024, the implied return on investment would only be half its 8% weighted average cost of capital, per Morningstar analysts. Nadella has defied such back-of-the-envelope financial logic before. And if nothing else, he has shown a willingness to be a bold dealmaker. On that basis, it’s easy to believe Microsoft will set its sights on Netflix.

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Source: Slashdot – Netflix Will Be Next On Microsoft’s Shopping List