Bethpage-based broadband communications and video services provider, Altice USA Inc. ATUS has reportedly reached an agreement with The Walt Disney Company DIS in relation to the dispute over channel carriage and retransmission fees.
The retransmission contract between the two companies was set to expire on Sep 30. The contract’s deadline has currently been extended in order to finalize the terms.
This implies uninterrupted access to Disney’s ESPN, ABC, the Disney Channel and other networks for Altice USA's Optimum cable customers in New Jersey, New York, Connecticut and Pennsylvania.
However, no further details of the tentative agreement have been provided by either of the companies.
Disney and Altice USA disagreed over the amount the cable operator will pay to continue offering ESPN, ABC and other channels on its Optimum cable service.
Disney's most important network, ESPN, has been losing subscribers and witnessing downward ratings, leading to declining revenues. Hence, Disney intended to increase its per-subscriber fees to offset revenue declines. Altice USA claimed that the programming fees were already high.
Notably, both the companies are under pressure from cord cutting i.e. loss of pay-TV subscribers to online video streaming providers such as Netflix Inc. NFLX, Hulu.com, YouTube etc. because of their cheap source of TV programming. This business model is gaining momentum, even during economic uncertainties, and has proven to be a threat to the pay-Tv industry’s business.
Due to cord-cutting, traditional pay-TV services, including cable and satellite, lost 976,000 customers in the last reported second-quarter 2017. Major cable TV behemoths like Comcast Corp. CMCSA lost 34,000 video customers and 22,000 voice customers. Charter Communications Inc. CHTR lost 90,000 video customers in second-quarter 2017.
Price Performance
Over the past month, shares of Altice USA have declined 10.5% compared with the industry’s decline of 0.8%.
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Altice USA currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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