), the second-largest U.S. mobile service provider, successfully
renewed a long-term contract with
AMC Networks Inc.
) following the expiration of the existing contract on June 20.
The deal will continue to show hit channels like "Mad Men" and
"The Walking Dead" apart from other channels like AMC, IFC,
Sundance Channel and WE TV on AT&T's U-verse Pay TV system.
AT&T's U-verse TV subscribers reached 4 million at the end of
the first quarter, with the net addition of 200,000 customers on
continued high-speed Internet attach rates.
AT&T was in negotiation with AMC for the past few days to
renew the agreement. AMC was demanding a huge rate hike for the
telecast of its channels on the company's U-verse TV. Finally, the
deal was reached on reasonable terms, though the deal price has not
yet been disclosed.
Meanwhile, AT&T's major TV service competitor,
Dish Network Corp.
) dropped the AMC channels from its Pay TV service due to higher
rates after the contract expired on June 30. The second-largest
satellite TV provider behind
) has replaced channels like AMC, IFC, Sundance Channel and WE TV,
with HDNet Movies, Style and HDNet. Dish TV carries around 14
We see these as positive moves for AT&T as it is now the
major carrier of AMC channels. The offering will boost more data
revenues and average monthly revenue per user in the wireline
segment. It will further help to counter increasing competition
from cable and satellite service providers such as Dish and
With this, AT&T foresees revenue returning to growth and
margins becoming stable this year. We believe healthy growth from
the company's U-verse video (U-verse TV and bundled satellite)
services will lead to the expansion of U-verse network deployment
to more customers going forward.
We are maintaining our long-term Neutral recommendation on
AT&T. The company retains the Zacks # 3 (Hold) Rank for the
short term (1-3 months).
AMC NETWORKS- A (AMCX): Free Stock Analysis
DISH NETWORK CP (DISH): Free Stock Analysis
DIRECTV (DTV): Free Stock Analysis Report
AT&T INC (T): Free Stock Analysis Report
To read this article on Zacks.com click here.