Of course, friendly negotiation may not be on every table. According the BusinessWeek piece, Time Warner may have been a bit more forceful. The conglomerate supposedly made a demand that Netflix pay more money for its entertainment products or risk receiving them after they've been sent to other retail channels such as Wal-Mart (NYSE: WMT).

This is a problem that must be solved. I'm sure it will be eventually. It's in the best interest of every entity involved that an amicable agreement on an optimal plan for dealing with declining DVD sales is hammered out.

Netflix has been doing well in terms of earnings, so the company doesn't want anything to spoil the trend. The chart also looks fairly good on a year-to-date basis, but more recently, the stock has retreated a little from its 52-week high of $50.24. In fact, Netflix closed down yesterday by over 3% to $44.62.

I would be careful about starting a position right now. If you already hold shares of Netflix with a paper gain attached to them, you may want to consider taking some money off the table. I'm not sure how significant this topic will eventually be to the Netflix thesis in the short-term (and keep in mind, the drop observed in the stock on Thursday had, as far as I am concerned, nothing to do with the BusinessWeek story -- it was a down day for the markets in general and the number of shares traded wasn't overly exciting), but I am reminded of how the company dropped in early September on news of a rental concept involving Google's (NASDAQ: GOOG) YouTube, which Brent Archer highlighted. As we all know, it's sometimes useful to find an excuse to book profits, especially in choppy times.

Disclosure: I own GE; positions can change without notice.