Could Verizon be about to buy Netflix? That is the gist of the rumors spreading at the moment. But they’re rumors based on what appears to be nothing but conjecture. And can’t see either side going for such a deal at this moment in time.
Verizon Buying Netflix?
Huge rumors abound suggesting Verizon is planning on acquiring Netflix. The rumor appears to have originated on DealReporter and made its way around the blogosphere. Once the rumors began the market responded, with Netflix’ share price rising considerably. This after a sustained period of bottoming out after the messy business of price increases and the planned splitting of the business.
This remains merely a rumor, with neither company having yet confirmed or denied that they are talking. It’s in Netflix’ interests for these rumors to swirl about for as long as possible, while Verizon will only care if they’re true as the asking price will be rising all the time.
Would Netflix Sell?
Would Netflix sell at this stage of proceedings? I cannot see it, personally. Yes, the company has dropped by a huge margin over the past six months, but Reed Hastings has always insisted he is in it for the longterm. I cannot see him bailing on the company he has built to this level of popularity and success on a whim.
Thinking longterm Netflix still has a potentially positive future. If customers forgive the company for its recent missteps, it can launch successfully in Europe, and get a handle on the cost of licensing content, then its future looks dazzlingly bright. If not, then a sale may be the best option.
Verizon is well known to be looking for an easy way into the video streaming market, and Netflix would offer that. However, it wouldn’t be cheap, with Netflix worth around $4 billion. And then there is the $4.5 billion of licensing commitments to consider as well.
I chalk this up as nothing but a rumor. But it’s a fortunate one with great timing for Netflix.
[Via Deadline New York]
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