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Tale of two streaming giants

After nearly a decade of borrowing $15B to fund original content, Netflix (NFLX) on Tuesday said it planned to be cash flow positive after 2021 and would no longer need to tap debt markets to fund its programming. Netflix also said it will consider share buybacks, a practice it hasn’t done since 2011, which was the last time the company was cash flow positive. The announcements came as part of Netflix’s earnings announcement, which saw shares surge 12% AH as the streamer surpassed 200M global subscribers for the first time (it topped 100M subs in 2017).

On the other side of the screen, Disney (DIS) temporarily halted its dividend last year following calls from Dan Loeb to permanently end the $3B annual shareholder payment. The activist investor urged Disney to plunge that cash into original content, as it centers its operations around streaming, with plans to roll out dozens of Star Wars, Marvel and Pixar movies. Disney+ has gained an explosive 86M subscribers within a year and now expects 230M-260M on its flagship streaming service by 2024.

Comments: “It’s super impressive what Disney has done,” Netflix co-CEO and co-founder Reed Hastings said during the earnings call. “It’s incredible execution for an incumbent to pivot to take on the insurgent. It shows members are willing and interested to pay for more content because they’re hungry for great stories. And Disney does have great stories.”

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