Photography by Andrew Harrer / Bloomberg
Shares fell on Wednesday after the company announced to DirecTV cable TV customers that it would lose access to popular Viacom channels if companies could not sign a contract renewal contract by the end of the week.
Despite the decline, some analysts believe that DirecTV could still have a lot to lose.
The story back.
(symbol: VIAB), shares have made the bulk of its gains from 2019 this month. The company had announced better than expected first quarter results in February, although cable channels it offers distributors have experienced a more difficult period.
The media company, whose assets include Nickelodeon, MTV and Paramount Pictures, has been speculated that it could merge with CBS (CBS). The two separated in 2006 and are both controlled mainly by the national entertainment of the Redstone family.
An agreement between the owner of DirecTV,
AT & T
(T) and Viacom which gives DirecTV access to Viacom channels expires at midnight Friday.
What's up. On Tuesday, Viacom's management said the discrepancy between the terms of the deal he was looking for and what AT & T was willing to pay was large enough to alert DirecTV viewers that he was in danger of losing the channels of the society.
Class B shares of Viacom closed down 5.5% to 26.01 dollars per share.
S & P 500
the index decreased by 0.3%.
Look forward. The last time Viacom and AT & T had concluded their distribution agreement, DirecTV had lost channels for nine days, a period in which management said that the number of lost subscribers had increased. Viacom got a 20% increase in fees.
This time, there could be more at stake, analysts at Swiss credit wrote in a note to customers on Wednesday.
"If AT & T abandons Viacom, the content of the company will immediately have more value for other distributors because it would differentiate their product from that of AT & T" and its 25 million subscribers, they noted .
Analysts said Viacom could also merge with CBS to take advantage of their combined offerings, which would include NFL and NCAA March Madness broadcasts.
"This suggests that AT & T has an interest in adopting the best possible rate by trading with a standalone Viacom, rather than the rate that it could get by trading with a combined CBS / Viacom," they noted. .
Credit Suisse analysts have stated that they expect the transaction to close at a rate 10% below that of the current agreement.
Write to Connor Smith at [email protected]