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Netflix Customers May See a $40M Walmart Payout

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In 2005, Blockbuster still had enough moxie to be a formidable foe in the eyes of Walmart and Netflix. But rather than waiting for the company to commit corporate suicide in a couple years, the superstore and online retailer formed a pact to corner the DVD market.

Walmart agreed to opt out of online DVD rentals, and Netflix promised to avoid physical DVD sales. With neither party stepping on each others' toes, the two companies were free to excel in their respective markets and watch Blockbuster begin to crumble.

But such a deal isn't very legal in the eyes of corporate lawyers. In fact, they're asserting that it's a violation of antitrust laws.

An Oakland court is now hearing a class-action suit against Walmart and Netflix. Both retailers are denying the allegations, however Walmart is looking to settle -- to the tune of $29 million to $40 million. Those eligible for the payout are Netflix subscribers who had a paid account since 2005, and the sum will be in the form of a gift card or a check.

Netflix, on the other hand, is sticking to its guns. A spokesperson said the company "believes the lawsuit lacks merit and [it] will defend it."

So much for a year's worth of free Netflix streaming. For now.
POSITION:  No positions in stocks mentioned.