Verizon Communications Inc.
), the largest telecom carrier in the U.S., has extended its deal
with media company,
). This will keep the latter's channel on Verizon's FiOS TV
network for the next three years.
Though the terms of the deal were not disclosed by either of
the companies, the new deal will allow the retransmission of CBS
networks, including its popular sports network, on Verizon's FiOS
TV system. Post the deal, FiOS TV subscribers in New York, Los
Angeles and Dallas will continue to view CBS' channels.
The deal comes amid CBS' existing dispute with
Time Warner Cable Inc.
) over higher programming fees from the cable MSO (multi service
operator).CBS intends to raise its retransmission fees by nearly
600%, which will impact the cable company's profitability. The
feud has been continuing for the past three weeks and has led to
a complete blackout of CBS channels in New York, Los Angeles and
The deal has been renewed at a time when a fresh season of the
very popular National Football League (NFL) will commence. The
2013 NFL season starts on Sep 5 and will end on Feb 2, 2014, with
CBS broadcasting the game from Sep 8, 2013. The renewed contract
will allow FiOS TV customers to enjoy the game till the end of
the season as the current one expires at the end of this
In the second quarter of 2013, Verizon's fibre-based FiOS TV
performed impressively adding 140,000 customers to its FiOS Video
and services. The company exited the quarter with 5.0 million (up
12.6% year over year) FiOS Video customers, majority of which are
in the cities of New York, Los Angeles and Dallas.
The deal was finalized within a short span of time in spite of
the amount being almost the same as the amount demanded from TWC.
For CBS, its distribution of channels will increase given FiOS
TV's growing popularity.
We believe that the timing of the deal strengthens Verizon's
position against Time Warner Cable in New York, Los Angeles and
Dallas. Verizon is expected to benefit from the absence of CBS
channels on TWC and gain a portion of the 3.2 million video
subscribers that CBS currently has in those markets.
Verizon currently carries a Zacks Rank #3 (Hold). Another
stock worth mentioning within this sector is
Cincinnati Bell Inc.
), which currently carries a Zacks Rank #1 (Strong Buy).
CINCINNATI BELL (CBB): Free Stock Analysis
CBS CORP (CBS): Free Stock Analysis Report
TIME WARNER CAB (TWC): Free Stock Analysis
VERIZON COMM (VZ): Free Stock Analysis Report
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