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

Oct 14 (Reuters) - Netflix Inc is discussing with several U.S. cable television operators the inclusion of its streaming video service on their set-top boxes, a source said on Monday, 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 is familiar with the discussions. The talks were first reported by the Wall Street Journal.

A sticking point in discussions has been the direct connection of the Netflix network to the cable systems - a set-up that Netflix believes will offer consumers the best experience.

Analysts said such video content deals with cable operators have been anticipated. "I think these things are going to become ubiquitous on television sets of the future," said Morningstar analyst Michael Corty.

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

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

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

Netflix Chief Financial Officer David Wells, speaking at a Goldman Sachs investor conference last month, said that the company was willing to strike similar deals with U.S. cable companies.