The magazine said the talks were far advanced but no deal had been clinched and that Netflix was also in touch with other German telecoms groups, sources said.
Last month, Netflix unveiled plans to launch in Germany and France this year.
The publication also said that Deutsche Telekom was open to accommodate Netflix's expansion even though the service would compete with the German company's own web-based TV offering called "Entertain."
Shares of Netflix are down -0.82% to $437.75 in early afternoon trade.
TheStreet Ratings team rates NETFLIX INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate NETFLIX INC (NFLX) a HOLD. The primary factors that have impacted our rating are mixed some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance and impressive record of earnings per share growth. However, as a counter to these strengths, we find that the company has favored debt over equity in the management of its balance sheet."