Moody's Says Coinstar/Redbox JV Is a Threat to Netflix (NFLX), But Keeps Ba2 Rating
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Moody's maintained its Ba2 rating and stable out look on Netflix (Nasdaq: NFLX) saying that while the Coinstar/Redbox JV poses a competitive threat for Netflix in the intermediate term, it will not be material enough to impact its Ba2 rating.
"While we believe the partnership will lead to increasing competition, such competition has been anticipated within the company's Ba2 rating. We believe that there will be other competitors as well, any of which may be disruptive for Netflix. However, Netflix is presently far ahead of all competitors in terms of subscribers (over 24 million in the US) and presently unrivaled DVD and streaming rights to film and television content. In Moody's view, Verizon brings capital and network capability to the Redbox business, however, the announcement is not material enough to impact Netflix's ratings which already account for competitive risk in the evolving content distribution industry."
"While we believe the partnership will lead to increasing competition, such competition has been anticipated within the company's Ba2 rating. We believe that there will be other competitors as well, any of which may be disruptive for Netflix. However, Netflix is presently far ahead of all competitors in terms of subscribers (over 24 million in the US) and presently unrivaled DVD and streaming rights to film and television content. In Moody's view, Verizon brings capital and network capability to the Redbox business, however, the announcement is not material enough to impact Netflix's ratings which already account for competitive risk in the evolving content distribution industry."
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