Should Verizon buy Netflix?

Rumors swirl that the telecom giant could acquire the red envelope. But such a deal could be bad for both companies -- and worse for customers.

By MSNMoney partner Dec 14, 2011 3:54PM
The Week

On Tuesday, an investment banker told Bloomberg that Verizon is "very serious" about buying Netflix, sending a flurry of rumors flying across the tech world. Just last week, it was reported that Verizon was considering launching its own streaming service to compete with Netflix. Would it make more sense for the company just to acquire Netflix? What would such a deal mean for Verizon, Netflix and customers?

It wouldn't do either Netflix or Verizon any good: Though there are exploitable synergies between the companies, they're better off remaining independent, says Todd Campbell at Seeking Alpha.

Verizon already has a huge customer base and deals in place that will position it well as entertainment increasingly becomes about "seamlessly delivering content across TV, PC and mobile devices."

And,while Netflix could surely use the acquisition cash, it wouldn't be enough, given that its value has fallen from a market cap of $12 billion in July to just north of $4 billion. Netflix needs to "keep its focus where it should have been: on its customers" and work on growing its subscriber base, not selling out.

Netflix has a little, but not a lot, to offer Verizon: Netflix would offer Verizon a "decent brand name," upwards of 23 million customers, and a wealth of content deals, Morningstar analyst Michael Hodel tells The Street. The Netflix customer base could be valuable to Verizon, and it might package Netflix with its other services, like Fios television. Netflix could also be added to Verizon Wireless. Still, Netflix has likely overpaid for its content deals, and those deals might have little value.

This deal could be "potentially terrible" for Netflix subscribers, says Jared Newman at Time. They can currently access Netflix on computers, smartphones and TVs regardless of their service provider. If Verizon bought Netflix, it could restrict the service to Verizon customers. And while Verizon is a traditional service provider, Netflix "is a disruptor of traditional television services," so a Verizon-owned Netflix would have little motive to spend millions on deals to bring more content to Netflix."

More from The Week

Dec 14, 2011 10:32PM
If verizon buys netflix I would drop netflix in a heartbeat......
Dec 14, 2011 8:12PM
If Verizon buys Netflix, I will cancel my Netflix subscription.  VERIZON SUCKS!!!

Dec 14, 2011 5:05PM

I hate Verizon. They have the worst customer service attitude of all; in fact "What customer service??" They spent a lot of money on expensive commercials but don't rely on them to help you with anything as far as service. That they can't spend money or time on....


Look, I've been a happy Netflix customer for many years but if Verizon takes it over, forget it. I'll drop Netflix right away and happily.

Dec 14, 2011 8:18PM
Thinking about dropping Netflix, Verizon purchasing them would be a deal breaker. I despise Verizon.
Dec 14, 2011 8:50PM
Heck NOOOOOOO!!!  Verizon will destroy Netflix
Dec 14, 2011 10:13PM
I am counting the days until my contract with Verizon expires so I can drop them.  They have the absolute worst customer service that I have ever experienced in my life.  If they were to take over Netflix in the interim I would drop my Netflix service as well.
Dec 14, 2011 9:11PM
absolutely not.  Verizon has its problems satisfying customers, and I would drop Netflix like a hot potato. I can see it all now, mainstream mainstream mainstream.  No more ecclictic offerings for film base. 
Dec 14, 2011 10:20PM
Oh great, we'd all get charged data rates for watching movies.  Well if you want to watch 2 movies a month or more via streaming, you'll have to get the unlimited data package for an extra $30 a month. 
Dec 15, 2011 12:11AM
Lets see, two year contracts and high prices. I hope not
Dec 14, 2011 10:51PM
If Verizon buys Netflix, it will be the end of Netflix.

Just as when Newscorp bought myspace.

Dec 14, 2011 9:37PM
Hell no !! Verizon has enough problems, I would drop Netflix the second  it got approved. I am already on the ropes with Netflix, Verizon would put me down for the count.
This is the most disturbing news i have heard all week. As a former customer to both merchants. i can atest the service would be less than great. the user fee's for Net Fiz would sky rocket as did Verizons Wirless fee's. I save so much mony each month am happy,content with saving on fee's just using Red Box  and i save a small inheritance by using Straight Talk each month. Wake up Verizon!, no one needs your stinking services
Dec 14, 2011 10:12PM
Verizon has a long standing history of discarding customers and business units that do not fit its strategic plan d' jour. Netflix customers will be next. Not spending enough on monthly dues? You're outta here! Too expensive to send hard-copy DVD's to your rural address out in the country? Outta here you too! Think I'm crazy? They did exactly that to their rural landline customers. They arrogantly decided that they did not want to provide landline service to the little guy in rural America and sold off, area by area and sometimes entire states at a time, its rural landline business. Then they got rid of their directory and internet company and then more rural and suburban landline customers. Just think what they will do to the Netflix existing client base.  But it was smart business sense for them to buy a  bankrupt  long distance company like MCI, in order to play "whose got the biggest telecom woody" with AT&T.
Dec 14, 2011 9:58PM
Double hell no; let them stew in their own turmoil. It is hard to understand why the stock holders didn't dump the CEO of Netflix when all the turmoil began. They lost millions due to some bird brain idea then expected the subscribers to pay for it. We sincerely enjoyed our two movies each week but when they raised their prices it was the fatal straw and when we did cancel them formally they continued to debit our bank account and we had to fight for the refund. Their customer service got real bad real fast. Must have had some coaching from Verizon..............!
Dec 15, 2011 2:13AM
Today we live in web and conspiracy, corporation has ton money can buy the broker politicians by  any mean,as lobby, donate to PAC and control and make us swallow all regulations and silly laws to protect their ton money.Look back 3/1/2003, Iraq war $1000 billions for nothing, money went to Halliburton pockets and big corporations.1/1/2009, $787 billions went to the bank pockets, all corporations. They will take all money and we're sweating and bleeding to death.
Dec 15, 2011 12:56AM
Horrible idea, it will be the end of the concept of Netfliix. I can see prices going up right away.
I'll drop my membership in a second to move 100% to Amazon instant movie service.
Why buy Netflix? They'll give it away in a few more months...
Dec 14, 2011 9:59PM
Upwards of a million people walked away from Netflix for a 60% price hike. I can only imagine how many would bail if Verizon took over. Verizon overcharges for everything. I hear it's $20 a month just for a DVR these days!!
Dec 14, 2011 6:23PM

let's see.....verizon DSL in my area is slightly better than dial up speeds.  Fios doesn't exist here yet.  so who streams videos in my area?  only people who like the SLOOOOOOOW download speeds. 


so what's verizon offer? 

Dec 15, 2011 1:12AM
Verizon is a joke; today it's $8 with Netflix, tomorrow is $80 with Verizon, and the sad thing is, they won't even warn you!  They simply charge what they want, when they want, and don't deliver half of what they say they will.  Doesn't Verizon own and control enough, that they now want to control what we watch, and when we watch it?  I had Verizon Wireless for years and years, but the 2 yr. contract, and them deciding they could change my plan at their discretion, was just the last straw for me, so if they bought Netflix, I'd drop my membership faster than you can say "Can you see me now?"  Call Verizon to find out about their plans; get the CSR's name.  Call back an hour later, and you'll not be told what the first person told you, and when you challenge it and say but (insert name here) just told me something else, this person will say that person didn't know what they were talking about.  Verizon is inconsistent, so yes, as others have stated, they need to clean themselves up first, then see if their public image could withstand the Netflix buy, or if all the Netflixers out there won't just dump them immediately.
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