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Verizon (VZ), CBS (CBS) Sign Multiyear Retransmission Deal

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Yesterday, U.S. telecom behemoth Verizon Communications Inc. (VZ - Free Report) entered into a multiyear content carriage agreement with media giant CBS Corp. .  The agreement allows the retransmission of CBS-owned television stations, CW affiliates, SHOWTIME, Smithsonian Channel, and CBS Sports Network on Verizon’s FiOS TV across the country. Financial terms of the deal were not disclosed.

In the near future, Verizon’s FiOS TV customers will be able to stream CBS live online and on mobile devices using the CBS App and Verizon's authenticated platform. Content providers are increasingly entering into agreements with content distributors which include online streaming facilities. At present, FiOS TV has approximately 4.7 million subscribers.

Previously, the industry circle was rife with speculations about a possible merger between CBS and Viacom Inc. . Nonetheless, On Dec. 12, 2016, Viacom announced that the company is no longer considering any strategic merger with CBS. Meanwhile, in Dec 2016, CNBC and the New York Post reported that Verizon was considering acquiring CBS.

The rumor about a possible Verizon-CBS merger has been floating ever since. However, nothing has happened so far in this regard. Notably, Verizon’s closest rival, AT&T Inc. (T - Free Report) has entered into a definitive agreement to takeover Time Warner Inc. . The proposed deal is under regulatory review.

Verizon had launched its mobile video service named “go90” in 2015. Internet TV is gradually gaining market traction in the U.S. Of late, the legacy pay-TV industry in the country has been facing severe competition from online video streaming service providers. The low-cost over-the-top video streaming service has resulted in massive cord cutting that is currently threatening the pay-TV business model. Internet TV has emerged as a strong alternative to counter this competitive threat.

Price Performance of Verizon

In the last six months, the stock price of Verizon has witnessed a negative growth of 3.37%, in contrast to the Zacks categorized U.S National Wireless  industry’s positive growth rate of 3.23% in the same time period.

Nevertheless, Verizon has a very powerful diversified business model. In the wireless front, it will start initial deployment of the upcoming 5G network in 2018 while on the wireline front, the company is aggressively expanding fiber-based footprint. In the digital media front, Verizon has become a major contender for the lucrative online advertisement business. We believe these are primary reasons behind the stock currently carrying 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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