LOS GATOS -- After giving in to Comcast's demands for payment to ensure strong streams to its customers, Netflix shares reached record highs Monday as another major Internet service provider signaled willingness for a similar deal.
Netflix stock reached an all-time intraday high of $449.69 Monday before closing at a record price of $447, an increase of $14.77, or 3.4 percent, from Friday's closing price for the video-on-demand company. The move follows Sunday's announcement of a groundbreaking deal with cable and Internet provider Comcast that will allow the two companies to join their networks to ensure customers of Comcast's Internet service will have access to Netflix's streaming service at speeds high enough to handle the traffic.
The two companies worked up the outline of a deal at CES in January, according to The New York Times, days before a federal court struck down the Federal Communications Commission's "net neutrality" rules designed to keep ISP's from favoring or slowing down specific Web services. That ruling has caused concerns that ISPs such as Comcast and Verizon could throttle Netflix streams to force payment; similar concerns were brought up when Comcast agreed to acquire its biggest rival, Time Warner Cable, for $45 billion earlier this month.
Neither company would divulge the amount of money that will change hands in the deal, but Michael Pachter, Wedbush Securities' managing director of equity research, predicted that Netflix will pay $25 million to $50 million annually for the next three to five years and is likely to pay similar amounts to other large ISPs.
Verizon Communications CEO Lowell McAdam said Monday that his company and Netflix have been discussing a deal for the past year and expect to come to a final agreement soon.