NEW YORK (TheStreet) --Shares of Netflix (NFLX - Get Report) were higher during mid-afternoon trading on speculation that the company Alibaba (BABA) is interested in formulating a bid for the streaming giant, CNBC's Melissa Lee reported on today's "Power Lunch."
Recode Managing Editor Ed Lee joined the program to discuss the reports.
"I think this is very unlikely to happen for a lot of reasons. Regulatory issues on both sides in both countries, and frankly on the China side the big problem with media there right now is censorship. It is regulated and monitored by the government," Lee noted.
Lee listed past ventures of American companies like Disney (DIS) and Apple (AAPL) who attempted to infiltrate the Chinese market only to be subsequently shut down. Disney's streaming deal with Alibaba, and Apple's iTunes were both terminated by the government in China.
"Even for the homegrown players it's hard," Lee said. He then spoke to the possibility of Alibaba buying only a stake in Netflix vs. the entire service.
"They could, but I think a more likely possibility would be the two going in on some joint venture in China. Netflix would help produce shows or movies and Alibaba would kick in money, resulting in a sanctioned streaming service in China," Lee explained.
Lee concluded by describing why Alibaba is so ambitious regarding the Chinese market.
"Alibaba views the Chinese market how a lot of U.S. companies view it, that there is room to grow. There's still a lot more that they need to tap into, and they have those ambitions. They're just not there yet because of the regulations in China."
Separately, TheStreet Ratings rates Netflix as a "Hold" with a ratings score of "C+." The primary factors that have impacted TheStreet Ratings 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.
TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.
You can view the full analysis from the report here: NFLX