Back to top

Image: Bigstock

Verizon in Tussle With Univision for TV Retransmission Deal

Read MoreHide Full Article

Verizon Communications Inc. (VZ - Free Report) has dropped Univision Inc.’s Spanish language TV channels from its fiber-based FiOS TV network. Notably, FiOS TV has approximately 4.7 million subscribers. In a letter to the Federal Communications Commission (FCC), Univision complained that the U.S. telecom behemoth pulled down its TV channels at 4:59 p.m. on Oct 16, two minutes before Univision's carriage deal with Verizon was set to expire, without any prior notice to the company.

Univision has urged the regulator to assure Verizon to come to the negotiation table to reach a fresh new deal. Univision is the largest Spanish-language TV broadcaster in the United States and is partially controlled by the Mexican cable MSO (multi service operator) Grupo Televisa SA (TV - Free Report) .

On the other hand, Verizon has claimed that Univision has proposed an increase of more than double of what they charge as retransmission fees for access to their channels. This is an excessive price increase by any means. The company also believes that the appeal for Univision’s programming is waning given their reported declining viewership.

Conflict between TV broadcasters and pay-TV operators is not new in the United States. At present, Viacom Inc. and Charter Communications Inc. (CHTR - Free Report) are still holding discussion to reach a negotiation. Earlier this month, The Walt Disney Co. (DIS - Free Report) and Altice USA Inc. (ATUS - Free Report) jointly signed a new retransmission deal after a bitter fight.

In the last three-four years, the internal dynamics of the U.S. pay-TV industry have been gradually shifting from cable-TV operators to low-cost OTT (over-the-top) service providers. Online streaming service providers have become a severe threat to cable-TV operators because of their extremely cheap source of TV programming. The trajectory of subscriber losses in pay TV continues to signify an unprecedented annual decline as cord-cutting intensifies.

Video offering, which represented the core business function of cable-TV operators, is losing popularity. At this juncture, pay-TV operators must revamp their business model otherwise they may gradually lose market share. Consequently, the TV broadcasters are also bearing the brunt of it.

Price Performance of Verizon

Verizon’s shares have increased 11.62%, outperforming the industry’s gain of 1.49% over the past 90 days. The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Hottest Tech Mega-Trend of All

Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.

See Zacks' 3 Best Stocks to Play This Trend >>

Published in