AT&T Averts Viacom Blackout In DirecTV With Renewed Contract

AT&T Inc. (NYSE:T) has averted a potential blackout of Viacom Inc. (NASDAQ:VIA) channels like MTV, Nickelodeon and Comedy Central in DirecTV by inking a renewed contract well past the official deadline. The deal has put to rest potential conflicts between the two powerhouses that jeopardized the uninterrupted delivery of popular shows and contents across the telecom carrier's pay TV service.

Viacom had previously accused AT&T of highhandedness and abuse of powers as it bargained high to set the fees to beam the channels. On its part, AT&T argued that Viacom was losing its mass appeal and no longer warranted annual fees in the vicinity of $1 billion. The potential crisis could have led to AT&T’s 24.5 million subscribers losing out on Viacom content.

Consequently, the two companies continued their negotiations past the set deadline of Mar 22 midnight to stave off a shutdown, and a deal for an undisclosed amount was finally reached.

Meanwhile, amid high subscriber churn for video-enabled services, AT&T has revamped its video content lineup at competitive prices. The strategic move is likely to increase its subscriber base and augment overall revenues as lower video packages are offset by higher digital ad revenues.

AT&T is currently offering DirecTV Now Plus package with HBO and about 40 channels for as little as $50 a month, while DirecTV Now Max package will offer more than 50 channels (including HBO) for $70 per month. In addition to live TV channels, including local options, the DirecTV Now Max package will provide an extensive on-demand library of movies and TV shows.

The revamped lineup seems to be the call of the hour as DirecTV Now reportedly lost more than 267,000 net subscribers as discounted introductory offers ended while traditional video subscribers fell 391,000. Moreover, revenues from the entertainment group, which included video services, fell from $12.6 billion to $12.2 billion in fourth-quarter 2018. The new packages will provide quality-driven video contents at competitive prices and with no annual contract.

Over the past year, the stock has lost 11.3% while the industry has rallied 8.4%.

With a focused roadmap, AT&T appears poised to turn the tables in 2019, which is likely to be a decisive year for the company. Whether this Zacks Rank #3 (Hold) stock can indeed deliver on its set targets and perform to its full potential in the year remains to be seen.

A couple of better-ranked stocks in the industry are CenturyLink, Inc. (NYSE:T) and Telenav, Inc. (NYSE:T) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

CenturyLink has a long-term earnings growth expectation of 5.3%. It topped estimates in each of the preceding four quarters, average positive earnings surprise being 23.4%.

Telenav beat earnings estimates in each of the last four quarters, the average being 23.7%.

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