Netflix shares spiked more than 6 percent today on rumors that Verizon Communications is thinking about buying the troubled DVD rental and movie-streaming service.
Verizon has made it clear it wants to get into the streaming business, and according to a report from DealReporter, the troubled Netflix could be just the ticket, especially since its stock has fallen off a cliff in recent months after a series of disastrous moves that have included raising prices and a now-abandoned plan to split its DVD rental and streaming businesses in two.
Still, despite those stumbles, Netflix remains a household name and, as of today, has a market cap of $3.94 billion, meaning that it would not come cheap to any buyer.
Still, Verizon has certainly been vocal about its intentions to get into streaming. Last week, the company's CEO said it had looked at buying Hulu. And it has also made noise about teaming up with Coinstar's Redbox. Netflix, though struggling at the moment, would definitely give Verizon instant credibility in streaming--not to mention millions of subscribers and thousands of titles to offer subscribers.
What it would also give Verizon, according to Deadline Hollywood, is financial commitments for licensing movies and TV shows that amount to $4.5 billion. "It would be far cheaper to buy Netflix's subscribers than it would be to buy the service," Deadline Hollywood quoted Tony Wible, an analyst with Janney Montgomery Scott, as saying.