Netflix Saw an Opportunity?

"With the prospect of Comcast buying Time Warner Cable, we suspect Netflix knew it was time to cut a deal with Comcast," BTIG Research analyst Rich Greenfield wrote in a Monday client note. He characterized the deal as a 180 degree turn for Netflix, and one that might not have been consummated were it to be a major hit to Netflix's earnings.

"Despite the new peering costs to be borne by Netflix to improve its subscribers' experience on Comcast, we have seen no release from Netflix reducing its guidance for calendar Q1 2014. We believe this speaks to the relatively small total dollars being exchanged at this point," Greenfield wrote.

Verizon Communications (VZ), on a Monday conference call confirmed they were in similar negotiations with Netflix and said the company was pleased with the arrangement, even if financial details were light.

"To view that we are going to be advantaging one over another really is a lot of histrionics at this point," Verizon said, while noting that heavy users like Netflix should bear some cost.

"We believe Comcast and Netflix reaching a deal illustrates how both companies were able to work out a mutually-agreeable market based solution without government intervention or regulation. We believe this bodes well for how heavy a hand the FCC and Congress have in deciding how to handle peering/interconnection policy, as well as for the approval of a Comcast/Time Warner Cable merger." BTIG's Greenfield concluded.

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