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Comcast Resolves Fox News Dispute, Inks New Carriage Deal

Zacks Equity Research
Updated

The year 2017 started on a positive note with some new deals, resolving of old disputes and fresh offerings. According to a recent report by The Wall Street Journal, Comcast Corp. CMCSA, a leading cable multi-service operator (MSO) in the U.S., finally puts an end to its 13-month old battle with Twenty-First Century Fox, Inc. FOXA over carriage of the YES Network in the New York City area. Comcast signed a new pact with Twenty-First Century Fox on Jan 1.

This new deal will see the continuance of Fox News, the restoration of the Fox regional sports channel YES, and the addition of 12 other Fox-owned regional sports channels. The previous deal to carry Fox News expired on Dec 31, 2016.

The terms of the new four-year (nearly) pact has been kept under wraps. But reports state that Comcast’s monthly carriage fee for Fox News will exceed $1.50 per subscriber initially, with annual increases.

Fox Business Network, a sister concern of Fox News, isn’t part of this agreement as its contract with Comcast hasn’t yet expired. However, a 21st Century Fox channel that Comcast is dropping is Fox College Sports because of low ratings.

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Comcast’s Plans

Sports networks have become a matter of contention between programmers and distributors because of their high rates per subscriber for MVPDs (a multichannel video programming distributor). The YES Network is the local TV home of New York Yankee games and serves about 1 million subscribers in the outlying areas of New York City. However, Comcast stopped carrying YES in Nov 2015 because of a contract dispute. It was also reported that YES had failed to generate enough viewership to justify the high price tag.

Nevertheless, the current decision of Comcast to bring back Fox News is a good one as it bodes well for Comcast’s long term. This is because Fox News is presently one of the nation’s largest pay-TV distributors with over 20 million subscribers. The Fox news network is at its peak in terms of ratings and number of viewers in its 20-year history thanks to the updates on the latest presidential election.

Comcast officials also expressed their content on the success in bringing back the YES Network after negotiations and deals that should favor both companies.

Price Performance & Other News

Although the stock of Comcast was in line with the Zacks categorized Cable TV industry in the past one year, share price managed to exceed the industry mark. The stock returned 24.10%, outshining the industry’s gain of 18.35%.

In another development, Canadian cable behemoth Rogers Communications Inc. RCI recently announced plans to dump its Internet Protocol TV (IPTV) platform and adopt Comcast Corp.’s cloud-based X1 video platform. Notably, Rogers Communication will be the third cable operator in Canada – after Shaw Communications Inc. SJR and Cox Communications – to shift to the X1 platform.

Zacks Rank and A Key Pick

Comcast currently carries a Zacks Rank #3 (Hold).

A better-ranked stock in the telecommunication sector is Liberty Media Corp.LMCA which sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Liberty Media posted a positive earnings surprise in three of the four trailing quarters, the average beat being 72.13%.

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SHAW COMMS-CL B (SJR): Free Stock Analysis Report
 
ROGERS COMM CLB (RCI): Free Stock Analysis Report
 
COMCAST CORP A (CMCSA): Free Stock Analysis Report
 
TWENTY-FST CF-A (FOXA): Free Stock Analysis Report
 
LIBERTY MEDIA-A (LMCA): Free Stock Analysis Report
 
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Zacks Investment Research