Netflix explores U.S. cable options, shares rise 5 percent

Reuters

Oct 14 (Reuters) - Netflix Inc is discussing withseveral U.S. cable television operators the inclusion of itsstreaming video service on their set-top boxes, a source said onMonday, as shares of the video rental company rose 5 percent.

Netflix is in talks with companies including Comcast Corp and Suddenlink Communications, said the person, who isfamiliar with the discussions. The talks were first reported bythe Wall Street Journal.

A sticking point in discussions has been the directconnection of the Netflix network to the cable systems - aset-up that Netflix believes will offer consumers the bestexperience.

Analysts said such video content deals with cable operatorshave been anticipated. "I think these things are going to becomeubiquitous on television sets of the future," said Morningstaranalyst Michael Corty.

Nevertheless, he said shares of Netflix are "over-valued"with most of the company's growth potential already priced intothe stock.

Netflix shares were up $16.43 at $317.16 in midday tradingon the Nasdaq exchange.

Last month, two European cable companies -- Sweden's Com Hemand Virgin Media in Britain -- struck deals to allow theircustomers to access Netflix through Tivo set-top boxes.

Netflix Chief Financial Officer David Wells, speaking at aGoldman Sachs investor conference last month, said that thecompany was willing to strike similar deals with U.S. cablecompanies.

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