Wells Fargo analysts weighed in on the media reports speculating that Netflix (NASDAQ:NFLX) may be interested in Paramount Global (NASDAQ:PARA) and its flagship movie studio business.
Business Insider reported that Netflix also considered buying MGM before Amazon (NASDAQ:AMZN) spent $8.5 billion on this acquisition. This report comes after Bloomberg reported last year that Netflix is exploring a deal to acquire Paramount Pictures, the company’s film studio.
“We've always viewed Paramount Studios (and PARA's CBS Studio) as a rare gem that, if put up for sale, could garner significant M&A interest from streamers; however, we're not convinced PARA would break-up and sell,” the analysts said in a client note.
They estimate that Paramount’s studios business could be worth around $30B, which suggests an upside to the current stock price after accounting for debt.
However, the analysts remain bearish on Paramount as they don’t suspect that Netflix has “any interest in PARA in its entirety so we're suspect of an all-out takeout of PARA.”
Wells Fargo analysts reaffirm their view that the bull case on PARA is a sale or break-up.