AT&T (T) Signs Carriage Deal With Discovery Communications

Telecom and pay-TV behemoth, AT&T Inc. (NYSE:T) recently signed a carriage deal with Discovery Communications Inc. (NASDAQ:DISCA) . The deal will provide AT&T’s customers access to Discovery Communications’ linear channels, including on-demand and TV Everywhere rights on AT&T U-verse and the DirecTV satellite TV platform.

This carriage agreement closely follows AT&T’s prior deal with HBO which delivers Time Warner Inc. (NYSE:TWX) -owned HBO’s content on DIRECTV Now across multiple platforms through satellite, online streaming and cable-based U-verse. Notably, AT&T is launching its online streaming service Over The Top (OTT) DIRECTV Now in the fourth quarter of 2016 owing to the growing popularity of the business model among millennials.

However, the financial terms of the deal have been kept under wraps.

Competition on the Rise

These IP-based service businesses usually take up operators to attract young customers. AT&T’s upcoming product, DirecTV Now is poised to give tough competition to rival satellite TV operator Dish Network Corp. (NASDAQ:DISH) which has already strengthened its footprint in the streaming business. DISH Network forayed into the Over-the-Top (OTT) video delivery market with the commercial launch of its Internet TV service – Sling TV – across the U.S. Unlike conventional cable TV, Sling TV does not require a contract or extra hardware installation. The service is supported by iOS, Android and Roku devices and is available at exceptionally low prices starting at $20 per month. The service allows access to top-rated TV channels such as ESPN and Disney Channel. Reports state that DISH Network’s Sling TV has already garnered around 764,000 subscribers.

The Bottom Line

This partnership is expected to benefit both the companies. On one hand, AT&T says that this deal is a crucial addition to its DIRECTV business and will help it expand its streaming service across multiple platforms in the industry. On the other hand, Discovery Communications is pleased to sign a deal with one of the leading telecom players in the U.S.

AT&T currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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