It's appearing that they might be able to finalize something. In a former post I noted that this may not be the best for both companies. They both need more customers and to cut content expenses, and it appears a merger might accomplish both. After today's NY Post article however, they estimate it would save the two companies a combined $7 billion per year. If this is the case, then it's a no-brainer that these two must merge in order to succeed.
UPDATE: done deal - press release