Shares of Indian film producer and distributor Eros International (NYSE:ESGC) surged on Monday following a report that the company was in early talks with Apple, Amazon, and Netflix to sell its film and music library. Eros stock was up 24% at 11:30 a.m. EDT.
Reuters is reporting that Eros is in discussions to sell its extensive content library, comprised of music and more than 3,000 Indian films. A deal could be worth roughly $1 billion, about twice Eros' market capitalization prior to today's news. Shares of Eros had tumbled nearly 80% since peaking in mid-2015 through market close on Friday, with the latest drop in late July due to a weak earnings report driven by delayed film releases.
None of the companies involved have commented on the report. Both Netflix and Amazon launched video streaming services in India in 2016, so a deal for exclusive Indian content would make sense for both companies. Apple seems less likely to shell out close to $1 billion for the content, given that its content efforts aren't nearly as broad. The talks are nascent, according to Reuters' source, so a deal being reached is far from guaranteed.
Eros operates its own streaming service, Eros Now, and it's unclear how a deal with a U.S. streaming giant would work. Eros Now is the centerpiece of Eros' growth strategy, with the company recently predicting that the service would reach 100 million subscribers over the next five years, up from less than 3 million today.
As always, buying a stock based on rumors and speculation is a risky move. These talks could end without a deal being reached, or a deal of narrower scope could end up being signed. Eros' content library would be a good fit for both Netflix and Amazon, but whether either company is willing to pour $1 billion into the Indian market remains to be seen.