THB #54: The New Math in Hollywood

The answer to many questions about the current rules of Hollywood come down to a simple idea… math is no longer the guiding force of the industry.

Building working businesses, making more money over time, is no longer the goal. It’s stock price or bust… or “somehow we are going to get Netflix’s 9x annual revenues market cap.”

That would make Disney’s Netflix-ified market cap about $585 billion instead of its measly $278 billion.

NBC/Universal alone would be worth about $180 billion, whereas the total market cap for all of Comcast is now $221 billion.

Not gonna happen.

Netflix may be valued by Wall St. like a tech stock, but it isn’t a tech stock. They are now an entertainment stock. Tech may improve their results somewhat. But they are selling content to subscribers. That is the business.

There is no unlimited future for Netflix. What they have done is stunning and worthy of college courses. But the number of households on the planet (outside of China) willing to pay for content by su…