DISH Network Corp.’s (DISH) 14 million satellite-TV customers will now continue to enjoy CBS Corporation’s (CBS) TV channel. Negotiations between both the companies are on owing to a fresh carriage contract. Shares of Dish declined 2% yesterday reflecting investors’ fears that it might end up losing a substantial number of customers if both the companies fail to reach an agreement.
CBS, one of the most viewed channels in the country, had earlier threatened to withdraw its channel from DISH’s network if both parties do not reach an amicable solution latest by 4 p.m. on Dec 4. DISH has been persistently losing pay-TV customers. A failure to come to terms with CBS might result in further customer churn and falling average revenue per user in the coming quarter.
Last quarter, the company lost 12,000 pay-TV subscribers. Average monthly pay-TV subscriber churn rate in the third quarter stood at 1.67% compared with 1.66% in the prior-year quarter.
In the recent past, other pay-TV providers have also faced a spat with channels. In Aug 2013, Time Warner Cable faced a month-long blackout of CBS’ network over programming contract renewal disputes with the latter. Consequently, the company lost a whopping 306,000 residential pay-TV subscribers.
In the same vein, DISH Network had a contract dispute with Time Warner Inc. (TWX), which resulted in the former dropping many Turner broadcasting channels including CNN and Cartoon Network. However, last month, both the companies decided to restore CNN and other channels to DISH’s customers.
DISH currently has a Zacks Rank #3 (Hold).
Stock to Consider
A better-ranked stock in this sector is LIN Media LLC (LIN) with a Zacks Rank #1 (Strong Buy).
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