Netflix’s Stock Crash Won’t Make the Big Media Moguls Feel Any Better

The biggest media companies in the world have concluded that they can’t beat Netflix NFLX on their own. So they are bulking up with very expensive mega-mergers.

It’s tempting to say that they shouldn’t bother: Why not let Netflix beat itself?

That’s what happened this afternoon, when Reed Hastings and company missed their second-quarter numbers by delivering 5.2 million new subscribers instead of the 6.2 million they had forecast.

Wall Street reacted by pushing shares down 14 percent, wiping out more than $25 billion in market cap. Netflix investors are used to big price swings, but still. That’s a big price swing.

The worry for investors is that Netflix’s crazy growth streak may be at an end, even though those five million new subscribers bring the company’s total to 130 million worldwide. Netflix’s financials – and, crucially, its nosebleed stock price – are predicated on many years of crazy growth to come.

Hastings and his lieutenants didn’t say much to persuade doubters on their earnings call this afternoon.

“We strive for accuracy,” shrugged Netflix CFO David Wells, before insisting that everything’s fine. “We think the background and underlying characteristics of the business haven’t changed. Our total addressable market is intact and hasn’t really changed … we’re still on track for a strong growth year this year. Maybe it’s going to come in a little bit differently than we expected and others expected.”

But it’s doubtful that AT&T T, and its new Time Warner employees, are taking much comfort in Netflix’s stumble. The same goes for Disney DIS and Comcast CMCSA, which are (for now) still fighting over the good parts of 21st Century Fox FOXA. And definitely for the smaller media companies that have yet to find someone willing to buy them.

That’s because all of those mergers and would-be mergers are being justified, in part, by the fact that Netflix has figured out how to sell a wildly popular video subscription service direct to consumers over the internet. And the big media guys are way behind.

AT&T now has HBO, but for the most part, that’s a wholesale business, which means HBO is reliant on distributors like Comcast (and now, AT&T) to peddle its product. Disney is going to launch its own video service – but won’t get it off the ground until next year. Everyone else is …

And it’s not just that Netflix has a big lead. It’s that the new conventional wisdom, spelled out by AT&T’s new content boss John Stankey in an address to employees last month, is that the winners in the content wars won’t be the ones with 130 million subscribers. They will be the ones with “300, 400 million customers.”

Who else can get there? Think Amazon AMZN, Facebook FB and Apple AAPL. Throw in Google GOOGL, for acronym’s sake.

So even if you’re a media mogul who thinks Hastings and his guys are wrong, and that Netflix is hitting a wall, you have to be prepared to take on the most powerful companies in tech. And in your heart of hearts, you don’t think you are.

That’s why you’re selling. And that’s why you’re not letting yourself feel that good about today’s news.

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