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According to Porter Bibb, managing partner at Mediatech Capital, Verizon, the second largest U.S. phone company, is considering the acquisition of movie and television streaming service Netflix.
In a television interview, Bibb said, “I am hearing rumblings from inside Verizon that they are very serious about either Netflix or something similar.”
Verizon is prepared to begin a bidding war for the service, which could result in a sale by the beginning of April, at approximately $4.6 billion. Verizon Chief Executive Officer Lowell McAdam recently told investors that the company was aiming to move beyond its Fios TV service and was looking into streaming video. “We continue to look at alternatives,” he said.
Why would Verizon be looking to acquire Netflix or a similar company? It has to do with the rising cost and continued popularity of streaming video over networks, which telecommunications companies feel they are not adequately compensated for by content providers like Netflix and Hulu.
If Verizon and Netflix did enter negotiations, would Verizon be able to make a successful bid? It’s unlikely that Netflix would settle for a lowball offer, because even though the company is currently down on its luck, just three months ago its shares were worth $300. It seems equally unlikely that Verizon has enough cash to buy Netflix, which, if it is for sale, would be of more interest to parties like Amazon. A purchase of Netflix would include its long-term contractual obligations, priced at an additional 4.5 billion dollars.
Verizon’s interest in Netflix is just a rumor at this point, started by Porter Bibb, who has made other unsuccessful predictions in the past. Just last year, he stated that Sony and Disney were discussing a buyout of IMAX, which didn’t happen. So far, both Verizon and Netflix have declined to comment on the rumors. Other sources, such as CNBC’s David Faber, have invalidated the rumors completely, saying that Verizon has not discussed buying Netflix.
[via Bloomberg]