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NEW YORK (

TheStreet

) -The

rumors

of

Verizon Communications

(VZ) - Get Verizon Communications Inc. Report

making a bid for

Netflix

(NFLX) - Get Netflix, Inc. (NFLX) Report

continue to swirl. One analyst thinks that Verizon does have something to gain from buying Netflix, but the gains might be limited in scope.

Morningstar analyst Michael Hodel said that buying Netflix would bring in more than 23 million current customers, a "decent brand name," and a number of content deals, albeit expensive ones.

Where Verizon could see value in the deal is the customer base, and packaging that with its FiOS television and other services, he added. Hodel also speculated that "Verizon may see some value in adding Netflix to Verizon Wireless as well."

On the other hand, Netflix has

overpaid for content,

TheStreet Recommends

and the content deals might not be worth much, Hodel said.

Hulu

,

Redbox

and Netflix have already been mentioned as potential partners for Verizon. Holden would expect Verizon to make a decision on online video distribution based upon the financial impact of each option.

Hodel has a $38 fair target price on Verizon.

Netflix has come under a great deal of pressure in 2011, as the company announced a price hike to its subscription service without announcing any increase in services. It also proposed to separate its DVD-by-mail business from the online streaming business, which caused a slew of negative comments, and forced the company to rethink

the controversial strategy

.

CEO Lowell McAdam spoke at a conference last week and said the company is interested in the video streaming subscription business, moving beyond its FiOS TV service. He said Verizon looked at Hulu, when it was up for sale over the summer, according to

Businessweek

.

Porter Bibb, managing partner at

Mediatech Capital

, went on

Bloomberg

television yesterday and added fuel to the story. He said he heard "rumblings from inside Verizon that they are very serious about Netflix or something similar."

Verizon declined to comment for the story.

Verizon shares were falling Tuesday, down 2 cents to $38.33.

--

Written by Chris Ciaccia in New York

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