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Here's Why AT&T's DIRECTV is Facing Blackout on 12 Channels
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Per a recent FierceCable report, U.S. telecom behemoth AT&T Inc.’s (T - Free Report) subsidiary DIRECTV has lost access to 12 local channels amid subscription fee-related disputes with Lilly Broadcasting L.L.C.
SJL Broadcasting, an affiliate of Lilly Broadcasting has blacked out six stations, which represent the aforesaid 12 channels on DirecTV. This dispute between the leading satellite TV company and the broadcast station group is centered around the amount DIRECTV should pay to transmit the channels.
The channels that DIRECTV is unable to transmit presently are WSEE-TV (CBS and CW affiliate in Erie, PA); WICU-TV (NBC affiliate in Erie); WENY (CBS, ABC and CW affiliates in Elmira, NY); KMAU-TV (ABC and MeTV channels in Wailuku, HI); KHVO-TV (ABC and MeTV channels in Hilo, HI); and KITV-TV (ABC and MeTV channels in Honolulu, HI).
We expect the parties to reach a fair agreement in the near future and restart broadcasts as before.
We note that AT&T faced a blackout in its long-standing legacy U-verse brand in 23 states last month. However, AT&T is planning to discontinue its U-verse service and shift some its customers to DIRECTV and DirecTV Now (its OTT online streaming service).
Given the underperformance of the U-verse brand – evidenced by results of the last reported quarter – the company’s decision to focus more on DIRECTV is a prudent one. However, several analysts believe that AT&T may lose as many as 62,000 video customers in the first quarter of 2017.
By venturing into the OTT space, AT&T has joined the likes of DISH Network Corp’s Internet TV service – Sling TV, and Sony Corporation’s Playstation Vue. We note that DISH Network also faced a recent blackout of 33 network affiliates in 26 markets by Hearst Television network.
Bottom Line
Blackouts severely affect a company’s growth prospects. Such incidents hamper the company’s market value, business as well as popularity. These not only directly hit subscriber count and ARPU (average revenue per unit) but also hamper top-line growth.
Meanwhile, AT&T’s DIRECTV unit was recently engaged in the settlement of a deceptive advertising suit filed by the Federal Trade Commission (FTC) and an antitrust lawsuit with the U.S. Department of Justice (DOJ). The antitrust lawsuit accused DIRECTV of exchanging a series of unlawful information with three of its competitors/rivals –– Cox Communications Inc., Charter Communications inc. (CHTR - Free Report) and AT&T (prior to DIRECTV’s acquisition in 2015) –– during its negotiations to carry the Los Angeles Dodgers owned SportsNet LA. It is well documented that lawsuits affect a company’s credit ratings, affecting its goodwill.
Price Performance
Despite such negatives and downturns, AT&T’s price performance is impressive. In the past six months, the stock gained 6.6% compared with the Zacks categorized Wireless National industry's increase of 6.0%.
We believe that the company’s strategic 5G network trials and its plans to launch 3GPP Mobile 5G Services in late 2018, unlimited data plans, improved Internet of Things (IoT) and cloud suite and thriving OTT service supported the upside.
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Here's Why AT&T's DIRECTV is Facing Blackout on 12 Channels
Per a recent FierceCable report, U.S. telecom behemoth AT&T Inc.’s (T - Free Report) subsidiary DIRECTV has lost access to 12 local channels amid subscription fee-related disputes with Lilly Broadcasting L.L.C.
SJL Broadcasting, an affiliate of Lilly Broadcasting has blacked out six stations, which represent the aforesaid 12 channels on DirecTV. This dispute between the leading satellite TV company and the broadcast station group is centered around the amount DIRECTV should pay to transmit the channels.
The channels that DIRECTV is unable to transmit presently are WSEE-TV (CBS and CW affiliate in Erie, PA); WICU-TV (NBC affiliate in Erie); WENY (CBS, ABC and CW affiliates in Elmira, NY); KMAU-TV (ABC and MeTV channels in Wailuku, HI); KHVO-TV (ABC and MeTV channels in Hilo, HI); and KITV-TV (ABC and MeTV channels in Honolulu, HI).
We expect the parties to reach a fair agreement in the near future and restart broadcasts as before.
We note that AT&T faced a blackout in its long-standing legacy U-verse brand in 23 states last month. However, AT&T is planning to discontinue its U-verse service and shift some its customers to DIRECTV and DirecTV Now (its OTT online streaming service).
Given the underperformance of the U-verse brand – evidenced by results of the last reported quarter – the company’s decision to focus more on DIRECTV is a prudent one. However, several analysts believe that AT&T may lose as many as 62,000 video customers in the first quarter of 2017.
By venturing into the OTT space, AT&T has joined the likes of DISH Network Corp’s Internet TV service – Sling TV, and Sony Corporation’s Playstation Vue. We note that DISH Network also faced a recent blackout of 33 network affiliates in 26 markets by Hearst Television network.
Bottom Line
Blackouts severely affect a company’s growth prospects. Such incidents hamper the company’s market value, business as well as popularity. These not only directly hit subscriber count and ARPU (average revenue per unit) but also hamper top-line growth.
Meanwhile, AT&T’s DIRECTV unit was recently engaged in the settlement of a deceptive advertising suit filed by the Federal Trade Commission (FTC) and an antitrust lawsuit with the U.S. Department of Justice (DOJ). The antitrust lawsuit accused DIRECTV of exchanging a series of unlawful information with three of its competitors/rivals –– Cox Communications Inc., Charter Communications inc. (CHTR - Free Report) and AT&T (prior to DIRECTV’s acquisition in 2015) –– during its negotiations to carry the Los Angeles Dodgers owned SportsNet LA. It is well documented that lawsuits affect a company’s credit ratings, affecting its goodwill.
Price Performance
Despite such negatives and downturns, AT&T’s price performance is impressive. In the past six months, the stock gained 6.6% compared with the Zacks categorized Wireless National industry's increase of 6.0%.
We believe that the company’s strategic 5G network trials and its plans to launch 3GPP Mobile 5G Services in late 2018, unlimited data plans, improved Internet of Things (IoT) and cloud suite and thriving OTT service supported the upside.
AT&T currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Zacks’ Best Private Investment Ideas
In addition to the recommendations that are available to the public on our website, how would you like to follow all Zacks' private buys and sells in real time?
Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>