Verizon eyeing a potential Netflix buyout

By on December 13, 2011, 10:46 AM

Verizon Wireless has emerged as a potential suitor to take over ailing video streaming service Netflix. Shares in Netflix surged roughly $6 as news of the possible buyout reached investors during trading on Monday.

Less than a week ago, word leaked that Verizon has been in talks with movie studios and television networks regarding licensing content for an online streaming service of their own. At the time, Verizon CEO Lowell McAdam noted that his company was interested in such a venture by admitting that Verizon considered putting in a bid for Hulu.com earlier this summer.

Verizon would stream video over Internet connections in markets where FIOS isn’t yet available. It is believed that if Verizon doesn’t buy Netflix, they could introduce their own video service with more than 3,000 titles at a price of $5 to $10 per month. In contrast, Netflix charges $8 monthly for access to over 30,000 programs.

Such a deal could be the saving grace for Netflix, a company that hasn’t had a favorable 2011. Trouble started in July when the online streaming site announced a restructuring of their DVD and streaming plans. At the time, it cost members $10 a month for unlimited streaming and unlimited DVD rentals by mail. The new plan split those services into two separate packages, resulting in a 60 percent increase if members chose to keep both services. Nearly a million subscribers left the service over the incident.

Netflix later decided to split the business into two, renaming the DVD-by-mail department to Qwikster. CEO Reed Hastings called off the plans less than a month later.

Both Netflix and Verizon declined to comment on a possible buyout.

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