Conflict between programmers (content developers) and distribution network operators (pay-TV operators) is common in the U.S. media industry. Disagreement among distributors and programmers regarding programming costs, affiliate fees and channel blackouts is almost a daily affair. The latest such dispute is an ongoing one between Comcast Corp. CMCSA and Discovery Communications Inc. DISCA.
Discovery plans to broadcast its highly-rated “Shark Week” starting Jul 5, however, the company is still negotiating with Comcast over the week long programming block. Comcast’s existing deal with Discovery ended on Jun 30. Last year, the “Shark Week” show started in the month of August and garnered the highest viewership rating for Discovery. Thus, Discovery is presently demanding a fair raise in the TV program’s affiliate fees.
However, Comcast is trying hard to contend the fee hike. Earlier, Discovery had raised voice against Comcast’s proposed takeover of Time Warner Cable Inc. TWC. In Apr 2015, Comcast finally dropped the deal after receiving vehement objections from the regulator, Federal Communications Commission and the Department of Justice. At present, Charter Communications Inc. CHTR is pursuing the acquisition of Time Warner Cable. Meanwhile, Discovery fears that Comcast will bargain hard about the carriage deal this time as a retaliatory measure.
Notably, Comcast is the largest cable MSO (multi service operator) in the U.S. with more than 22 million video subscribers. Many of the users have subscribed to the company’s video-on-demand and TVEverywhere services. As a result, the company may attempt to include mobile rights in order to telecast the Shark Week shows of Discovery. Failing to reach a negotiation with Comcast may deal a severe blow to Discovery as it will lose a significant number of viewers.
Comcast’s next-generation Xfinity TV is an on-demand, web-based service, which enables subscribers to access both video programming and Internet. The new Xfinity TV set-top box is integrated with an innovative system which facilitates easy navigation between live and on-demand programming.
On the other hand, Discovery is a pure-play non-fiction TV content developer. The non-fiction media market is highly competitive and as a leading player of this segment, Discovery is facing fierce competition. The company’s national TV networks compete with other broadcast and national TV networks. Also, Discovery is highly susceptible to changes in the distribution and viewing of TV channels.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment