Verizon Rumor Mill Keeps Spinning: Will It Buy Troubled Netflix?

Shares of the subscription rental company are rising on a DealReporter story that it will move from Redbox to red envelopes

Boy, is Verizon keeping the rumor mills churning.

A week ago, it looked like the telecom titan was teaming up with Redbox to construct a possible Netflix killer.

Now shares of the subscription rental company are rising on a DealReporter article that reports that Verizon may simply buy Netflix.

A Netflix spokesperson declined to comment on what he termed “rumors or speculation.” A spokesman for Verizon did not immediately respond to requests for comment.

Also read: Redbox and Verizon Get Hitched: Are You Worried Now, Reed Hastings?

But some members of the Wall Street cognoscenti poured cold water on the idea of a Netflix deal, pointing out that its market share is about the same as the amount of money the company has committed to spending for the streaming rights to films and television shows, making it a less attractive target. 

“Netflix has said it owes more than $3.5 billion over the next several years — that’s right, about equal to Netflix’s current market value — to buy the rights to TV shows and movies, and Netflix continues to strike new entertainment-content agreements,”  the Wall Street Journal’s Shira Ovide wrote. “And if a deep pocketed owner buys Netflix, you better believe the TV-and-movie companies will be demanding an even bigger pound of flesh.”

Stock of the company jumped nearly 5.6 percent to $74.85 in recent trading.

Netflix’s stock was trading at $300 as recently as July, but the past several months have been devastating to the company. Subscribers have defected after Netflix introduced a price hike to its most popular subscription plan and engaged in an aborted attempt to spin off its DVD-by-mail business.

As for Verizon, the company is clearly looking to stick its flag in the streaming market and it has the deep pockets to align itself with a Netflix or a Redbox either through partnership or acquisition.

However, Verizon seemed pretty set on going with the kiosk operator.

According to a report on TechCrunch, a Verizon and Redbox backed service will launch in May and would be credit based, with consumers paying a monthly fee for credits they can use to rent movies, games and television shows.

The service would apparently stream content to smart phones, Google TV, Xbox and Roku.