Time Warner Cable Inc.
), the second largest cable multi service operator (MSO) in the
U.S., has inked a deal with
). The deal will allow the largest U.S. satellite TV provider to
broadcast the cable MSO's two sports network in the Los Angeles
(LA) area. The deal could be significantly beneficial for Time
Warner as DirecTV is one of the biggest pay TV distributors in
California with a customer base of about 1.2 million.
On October 1, 2012, Time Warner launched two new sports
channels - Time Warner cable SportsNet and Time Warner Cable
Deportes - that broadcast the LA Lakers basketball games in
addition to games from LA galaxy soccer teams and LA Sparks Women
Last year, Time Warner cable paid about $2 billion to gain
broadcasting rights of LA basketball games for 20 years. DirecTV
became the fifth company to ink such a deal with the cable MSO,
who earlier announced similar deals with Cox Communications,
Verizon Communications Inc.
Charter Communications Inc.
The deal puts DirecTV in a winning position against arch rival
Dish network, still negotiating with Time Warner cable over a
possible deal. The deal will allow the DirecTV customers to
connect better with their teams as Time Warners' exclusive
partnership with LA teams allow it to provide in depth team
analysis and behind-the-scenes coverage unlike ever before.
Sports entertainment has become the most expensive form of
programming with nationwide sports channel charging as much as $5
per subscriber while regional sports channel is charging only
$2-$3 from their customers.
New York-based Time Warner is negotiating with various pay TV
firms to offer the two sports entertainment channels and is
looking for a monthly average fee of $3.95 per subscriber. We
believe such deals will allow Time Warner Cable to cover its
hefty contract fees and at the same time hedge its escalating
programming cost by offering these less expensive regional sports
We maintain our long-term Neutral recommendation on Time
Warner Cable. The company also retains a Zacks #3 Rank, implying
a short-term Hold rating.
CHARTER COMM-A (CHTR): Free Stock Analysis
DIRECTV (DTV): Free Stock Analysis Report
AT&T INC (T): Free Stock Analysis Report
TIME WARNER CAB (TWC): Free Stock Analysis
VERIZON COMM (VZ): Free Stock Analysis Report
To read this article on Zacks.com click here.