The Wall Street rumor mill went into overdrive Wednesday.

Shares of Roku (ROKU -0.41%), the leading streaming-device maker, jumped 9.1% on talk of an acquisition by Netflix (NFLX -6.07%), the leading streaming service.

According to Business Insider, Roku employees have been buzzing about a possible acquisition, focusing their attention on Netflix -- in response to management closing down all employee trading of the stock, a sign that it could have big news to share.

There are a number of reasons a Netflix-Roku tie-up could make sense. Roku used to be part of Netflix before being spun off in 2008, and the stock is now on sale, having plunged 80% since last fall. Netflix is also angling to launch an advertising business, and Roku is one of the top ad tech players in connected TV.

However, before investors start salivating over a deal that would combine the streaming distribution and content leaders, a reality check seems in order.

Why a deal is unlikely

First off, the Insider report was thin on details that could indicate real talks are taking place between the two companies. The report focused only on Roku employees but not management talking about an acquisition, possibly by Netflix. There was no comment on management shopping for a buyer, or Netflix looking to take over the company. The bulk of the article was discussion of the logic behind a possible deal and third-party commentary on whether it would make sense.

Notably, no other media outlet confirmed a potential buyout, which is typical when stories like this break. If the rumor had legs to it, an organization like The Wall Street Journal, Bloomberg, or Thomson Reuters would have likely confirmed the scoop with its own reporting. That didn't happen.

And the notion that employee scuttlebutt is linked to an actual deal seems like a stretch. Roku employees would probably love a buyout at this point after watching the stock plunge 80%, but that doesn't mean it's going to happen.

Beyond the report itself, the timing for a blockbuster deal would be odd for Netflix. The company has never made an acquisition of more than $1 billion, and its business is in disarray after the stock plunged on a surprise subscriber drop in the first quarter. Management has been desperate to shave costs, issuing two rounds of layoffs while chopping dozens of TV and film projects.

Netflix management now understands that it underestimated the impact of competition, and that it overspent on content for several years. The company needs to rightsize its content budget and focus on growing its subscriber base again. Buying Roku won't help Netflix solve those problems.

Finally, acquiring Roku, which currently has a market cap of $14 billion, would be expensive. An all-stock deal would dilute Netflix shareholders by 15.5% to acquire a company that's expected to lose money this year and next, and financing the purchase would be difficult because Netflix already has $14.5 billion in debt from its content binge.

If Roku were to seek a buyer, it would likely demand a steep premium because the business is still growing rapidly. It has not been impaired the way Netflix is.

The biggest hurdle to a deal

The real reason why a deal won't happen has to do with competition. Roku has become the leading streaming platform by forging deals with top streaming services including Netflix, Disney+, HBO Max (owned by Warner Bros. Discovery), Peacock (owned by Comcast), Paramount+, Apple TV+, and Amazon Prime Video, among others. Some of those deals, including with HBO Max and Peacock, only took place after weeks of intense negotiations over advertising revenue share.

Many of Netflix's streaming competitors would likely balk at a Roku takeover. Some could even leave the platform, or at the very least renegotiate those advertising deals and other data-sharing arrangements. It's unlikely that HBO Max, for example, would be comfortable with Netflix knowing how users interact with its content.

For similar reasons, a Netflix-Roku combination would be likely to pique the interest of antitrust regulators. Combining a distribution leader with the product leader sounds like an antitrust issue in any industry, but especially in video streaming, where the table stakes have skyrocketed with the entry of so many major players in recent years. There's no reason for regulators to allow Netflix to tip the scales by taking over Roku, and Netflix would likely have to pay Roku a large breakup fee if a deal was blocked. It's not worth the risk to the streamer.

Rumors of a deal could continue to swirl over the next few weeks, and Roku stock may remain elevated by the chatter, but there are a lot of reasons why no deal will happen.

With Roku stock down 80%, that's good news for Roku investors: They'll probably get a better payoff in the long run without a buyer.