Will Netflix, Virgin Deal Have Staying Power?

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Sept. 11 (Bloomberg) -- Netflix’s subscription-video service will be offered on Virgin Media cable systems in the U.K., marking the first time the Web-delivered product is integrated by a major pay-TV provider. Wedbush Securities Michael Pachter, KeeneOnTheMarket.com's James Ramelli and Bloomberg's Julie Hyman speak with Trish Regan on Bloomberg Television' "Street Smart." (Source: Bloomberg)

Something that is significant because of the symbolism.

Essentially, virgin media eating together with netflix, it -- getting together with netflix, it is acknowledgment that virgin media customers want access to netflix, so rather than having adversarial relationship that has been characteristic of what we see between netflix and cable companies, virgin media is turning to a more collaborative relationship.

What is interesting here among the other features of how this works, it works through virgin media.

They can access virgin media through tivo boxes.

When customers do a search for content, it will include netflix content as well, so any movie netflix has, any actor in those movies will be accessible.

Michael, let me go over to you.

You have a company that is saying instead of competing with netflix, i will try to ring it into the fold.

Is this going to work?

It is smart of virgin media to embrace.

They have done this with tivo.

I do not think you will see this by the u.s. cable guys.

Why will he not see it in the u.s.? comcast is doing it themselves with infinity.

Verizon is doing it with red . at&t -- re dbox.

At&t is skeptical.

Nobody fears netflix because even though they do not present themselves as such, they are an alternative.

They are a reason for people to cut the cord.

People are putting rabbit ears up and getting their content through netflix.

People have said netflix has opportunities to keep growing membership rosters, the more and more people signing up, the better the prophet margins.

I know you do not agree with that because you are concerned that content costs will skyrocket.

Walk us to why you believe so.

It is a misstatement to say fixed price on the content side.

They share in the revenue at the movie theater, on television.

They get it.

Are they sharing the revenue on netflix?

They negotiate deals one year at a time, but if netflix pays $20 million, when they go to 30 million subscribers, they will pay more.

Content guys fear that is not enough, especially when the court -- they fear being the cord being cut, and -- what about netflix creating their own content?

Everything netflix has done so far is somebody else creating content and renting it.

They do not own it.

They have renewable -- renewal rights to "house of cards." i do not think they are close to hbo.

This is a reason why you have underperform on the company.

Let's go to jim for his trade . we are looking for netflix making another new all-time high.

The momentum is unstoppable.

I cannot step in front of this.

I think the stock is going to head higher.

Are you talking about this from a technical perspective?

Michael after has fundamental concerns -- the compactor has fundamental concerns.

-- michael packed her has fundamental concerns.

I can't to go about setting up a call spread.

There is a reward potential of 740 -- $725. it sets up really well in a risk versus reward basis.

Michael, near-term, could we see a move higher?

I think there is no shortage of greater fools out there willing to bid up internet stocks.

Their quality internet companies hitting all-time highs and i think netflix is but his opinion that rally.

Like a lot of skepticism out of

This text has been automatically generated. It may not be 100% accurate.

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