Currency

Now Streaming On Netflix: A Takeover Story?

12/13/2011 11:23:25 AM

Netflix, once a threat to remake the entertainment industry, is now being talked about as a takeover candidate.

Several reports say that Verizon Communications, which has expressed interest in getting into the streaming video business, is interested in Netflix either as an acquisition or as a strategic partner.

A Bloomberg story quotes an investment banker as saying Verizon is “very serious” about making a bid for Netflix.

After a series of missteps, including increasing prices and renaming its DVD-by-mail service, Netflix’s stock has been depressed. But thanks to the takeover rumors, Netflix shares were up 1.41% to $76.32 in morning trading.

Analysts are trying to figure out whether a deal will take place, and what it would mean.

“Will Netflix be sold? We would expect short covering to continue after the speculation circulated yesterday that Verizon might seek an online partnership with Netflix or even an outright acquisition,” said David Joyce, media analyst at Miller Tabak + Co. “With Netflix’s strategy missteps and subsequent stock plummet, that has opened up potential opportunities for telco video distribution companies or online ecommerce companies to consider adding this company with 22mm+ subscribers to their reach. Also, we would think that entertainment companies could become interested in buying Netflix as a means of protecting but enhancing the TV ecosystem, instead of Netflix’s current role as a disruptor.”

Meanwhile, Sanford C. Bernstein senior analysts Craig Moffett, in a note, simply called Verizon’s apparent flirtation with Netflix “ludicrous.”

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