Movie Theaters Risk and Opportunities; Netflix/WBD Deal; Is Disney Cheap?

Is the recent selloff in CNK overblown? Thoughts on the NFLX/WBD deal; MCS FCF; Thoughts on Disney and its valuation

Netflix successfully won the bid (for now) for Warner Bros Discovery, which obviously includes the fabled Warner Bros movie studio and all of its valuable IP. This sent a shockwave through the movie theater industry, with Cinemark falling 8% Friday and hitting 52 week lows.

The concerns about Netflix owning a studio are obvious: they’ve been mostly against releasing their own content to theaters (though they have released 30 films to theaters with short windows). Why wouldn’t they just buy up WB’s studio and use it to feed their unrelenting appetite for streaming content?

Since Netflix emerged as a possible WB winner, CNK is down 25% in just two weeks, despite big wins at the box office with Wicked and Zootopia 2 (and Avatar on the horizon).

I think the risk here is overblown, for a few reasons: