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Altice USA Drops Starz Channels on Declining Viewership

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Altice USA Inc (ATUS - Free Report) and Starz Inc. have reportedly failed to ink a new programming deal on the eve of New Year. This led to the blackout of 17 Starz, StarzEncore and MoviePlex premium channels in Altice USA’s Optimum and Suddenlink cable TV services.

Based in Bethpage, NY, Altice USA is one of the largest broadband communications and video services providers. Starz Inc — based in Meridian, CO —is an American entertainment company that owns pay television channels, a media distribution company as well as animated television and movie production.

Since midnight Dec 31, Starz or StarzEncore programs were dropped from Altice USA’s cable services. Instead, Altice USA advised Optimum and Suddenlink customers to subscribe to the Starz over-the-top (OTT) streaming service for $8.99 per month.

Due to declining viewership and lesser popularity, Altice USA is likely to drop extra charges from customers for Starz programming. Also, the programs are available directly through Starzs' own OTT service. On the other hand, Starz blamed Altice USA of demanding a drastic reduction in carriage price, compared with the market. The failure to ink a new carriage deal implies tense talks between the companies over how much the cable operator should pay to continue offering the premium channels to customers.

Per sources, Altice USA launchedalternative entertainment channels that will provide pocket-friendly content experience. The Starz channels will be replaced with Hallmark Drama, Sony Movies, MGM HD, HD Net Movies, Flix and Cowboy Channel.

In October 2017, Altice USA reportedly reached an agreement with The Walt Disney Company (DIS - Free Report) in relation to the dispute over channel carriage and retransmission fees. The retransmission contract between the companies was set to expire on Sep 30. This led to uninterrupted access to Disney’s ESPN, ABC, the Disney Channel and other networks for Altice USA's Optimum cable customers in New Jersey, New York, Connecticut and Pennsylvania.

Other Retransmission Conflicts

Conflict between TV broadcasters and pay-TV operators is not new in the United States. In October 2017, Verizon Communications Inc. (VZ - Free Report) dropped Univision Inc.’s Spanish language TV channels from its fiber-based FiOS TV network. Viacom and Charter Communications are still holding discussions to reach a negotiation. In November 2017, DISH Network Corp (DISH - Free Report) inked a multi-year program licensing deal with CBS Corp, after resolving a three-day blackout.

Zacks Rank & Price Performance

Currently, Altice USA carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Over the past month, Altice USA’s shares have returned 16.7% compared with the industry’s rally of 4.0%.

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