Time Warner Aims To Woo Millennials With $100M Snap Deal

In an effort to attract more young audience and increase advertising revenues, Time Warner Inc. (NYSE:TWX) has struck a deal with Snap Inc. (NYSE:SNAP) . Per the deal, Time Warner will create and produce 10 original shows annually over the next two years. The financial terms of the deal have been kept under wraps. However, people familiar with the matter revealed that the value of the deal is pegged at $100 million.

Time Warner will make variety of shows like scripted dramas, documentaries and comedies. Following the deal, the number of shows on Snapchat will increase to three per day from one by the end of 2017. Earlier, Snap had sealed similar deals with other companies such as Comcast Corporation’s (NASDAQ:CMCSA) NBC Universal and The Walt Disney Company’s (NYSE:DIS) ABC Networks.

Per the media report, revenues generated through advertising will be divided equally among both the companies. Time Warner’s Executive Vice President Corporate Marketing and Communications, Gary Ginsberg said that “Partnering with Snap will help drive this compelling new format, exposing its user base to innovative and engaging video from brands and characters they trust and enjoy. We’re confident this partnership will help drive larger audiences to our shows and to the new direct to consumer platforms we continue to rollout. “

Following, the news company’s shares witnessed a marginal gain of 0.7% yesterday. However, in the past one year the stock of this diversified media conglomerate have outperformed the Zacks categorized Media Conglomerates industry. The stock has surged 39.1%, while the industry has advanced 11.1%. While the broader Consumer Discretionary sector gained 19.7%.

The company’s initiative to foray into new markets has been helping in broadening client base and product portfolio. Management is now concentrating on enhancing reach in the existing territories, through investments in local production and gaining distribution rights for new networks. Moreover, rising demand of its content from distributors and other cable or satellite providers is improving revenues. Moreover, Game of Thrones is all set to return for its highly anticipated seventh season on Jul 16 and will be premiered on HBO.

Time Warner, which accepted the buyout offer of AT&T Inc. (NYSE:T) , is also boosting broadband distribution capabilities. Further, the company has entered into an affiliate agreement for its full suite of networks, comprising TNT, Cartoon Network, CNN and TBS, to be available on Hulu’s live-streaming service.

Time Warner 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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