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Time Warner Cable Extends Viacom Deal

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Time Warner Cable Inc. , the second largest cable MSO (multi-service operator) in the U.S., has renewed its distribution agreement with Viacom Inc. (VIAB - Free Report) . This multiplatform agreement will allow Time Warner Cable to telecast all TV channels of Viacom in SD, HD, video-on-demand, authenticated websites and applications platforms.

Additionally, per the new deal, Time Warner Cable gained rights to distribute movie network Epix, a joint venture between Viacom, Lions Gate Entertainment and Metro-Goldwyn-Mayer Studios.

We believe renewal of Viacom’s network is a huge relief for Time Warner Cable. In Aug 2013, the company faced a month-long blackout of CBS network over programming contract renewal disputes with CBS Corp. (CBS - Free Report) . In the third quarter of 2013, Time Warner Cable lost a whopping 306,000 residential pay-TV subscribers primarily due to the CBS network blackout.

Comcast, the largest cable MSO in the U.S., also lost 129,000 video subscribers in the same quarter. In a recently published report, Leichtman Research Group stated that the top nine U.S. cable TV operators had a net loss of 600,643 pay-TV customers in the said quarter. This was the cable TV industry’s biggest net loss after the third quarter of 2010.

Last month, Time Warner Cable renewed its existing deal with Discovery Communications Inc. (DISCA - Free Report) . The multiplatform agreement will let subscribers watch live as well as video-on-demand Discovery programs. In the future, Time Warner Cable intends to negotiate with Discovery to offer its network to the TVEverywhere subscribers with an authenticated log-in facility. As a result, viewers will be able to watch Discovery contents even when they are outdoors.

Both Time Warner Cable and Viacom currently have a Zacks Rank #3 (Hold).

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