DISH-CBS Contract Extended for 5 Days as Talks Continue
A last minute agreement between DISH Network Corp. (DISH) and CBS Corporation (CBS) has helped avoid the blackout of the latter’s TV channel for DISH’s 14 million satellite-TV customers. The contract, initially supposed to expire yesterday, has been extended by 5 days.
Despite this development, DISH’s shares declined more than 3% reflecting investors’ fears that the company might end up losing a substantial number of customers if both the entities fail to reach an agreement.
Yesterday, CBS declared that talks between both the companies are on in order to reach a mutually-benefiting agreement. CBS is one of the most viewed channels in the country. 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 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. Furthermore, DISH may drop two popular cable networks like TBS and TNT if it fails to reach an agreement with Time Warner, going ahead.
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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