, the largest satellite TV operator in the U.S., is all set to
enter into a new distribution deal with
)-owned NBCUniversal. By virtue of the deal, the former will
offer popular channels of NBCUniversal like CNBC, Bravo, MSNBC
and other channels to its customers.
However, Comcast SportsNet Houston, a regional sports channel
and G4 channels will not be the part of the deal as DirecTV
failed to negotiate rates.
DirecTV is continuously signing new deals or renewing
contracts with cable and channel partners. Few days back, the
company signed a deal with
Time Warner Cable Inc.
) to telecast the cable MSO's two sports network in the Los
Angeles area. The company also entered into an agreement with
) to broadcast its huge range of channels to its subscribers.
Such agreements with different network and cable partners will
not only help DirecTV to boost its customer addition, but will
also allow the company to offer superior services to its
subscribers, thereby improving subscriber churn going
forward. Separately, DirecTV subscribers can no more view
TVB channels due to the recent disagreement between TVB network
and DirecTV. Thus, in order to offset any further subscriber
loss, the company is signing more deals with other channel
However on the down side, such increased amount of new deals
coupled with renewal of contract with
) at 30% higher rate will elevate DirecTV's programming expense,
hence putting more pressure on margins.
We are maintaining our long-term Neutral recommendation on
DirecTV. Currently, the stock holds a Zacks #3 Rank, implying a
short-term Hold rating.
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