Janney Montgomery Scott Maintains a 'Neutral' on Viacom (VIAB); DTV Carriage Resumes, But At What Cost? Vicious Cycle
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Price: $69.72 +1.38%
Rating Summary:
6 Buy, 8 Hold, 1 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 11 | Down: 35 | New: 23
Rating Summary:
6 Buy, 8 Hold, 1 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 11 | Down: 35 | New: 23
Trade VIAB Now!
Janney Montgomery Scott maintains a 'Neutral' on Viacom (NASDAQ: VIAB) price target of $51.00 (from $55.00).
Analyst, Tony Wible, said, " VIA and DirecTV (NYSE: DTV) announced a new 7 year carriage arrangement with DTV, ending a 10-day blackout of VIA's channels for DTV's 20 million subscribers. Bloomberg reports the new deal is worth over $600 million in annual in affiliate fees, which amounts to a 20% increase in value over the new carriage term (or low single digits annualized growth). This would be well below recent trends. In the last four quarters, VIA has achieved affiliate fee growth of 16.4%, significantly above what is now implied. Our current projections call for 10.8% affiliate revenue increases in 2013, which also seems high in the context of the DTV deal. As a comparison, we are modeling 2013 affiliate revenue increases of 5.1% and 5.6% for Disney (NYSE: DIS) and Time Warner (NYSE: TWX), respectively. Weaker fees compound the headwinds VIA faces with weaker ad revenue."
"Vicious Cycle – The DTV dispute highlights the potential for a broader vicious cycle from OTT adoption and reinforces our view that distribution is gaining an edge on content. We see a tipping point where OTT content sales lower ratings/ad revenues, which may be spilling over to affiliate fees. This pressure increase the reliance on OTT sales that could perpetuate the vicious cycle."
For an analyst ratings summary and ratings history on Viacom click here. For more ratings news on Viacom click here.
Shares of Viacom closed at $46.41 yesterday, with a 52 week range of $41.72-$49.85.
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Analyst, Tony Wible, said, " VIA and DirecTV (NYSE: DTV) announced a new 7 year carriage arrangement with DTV, ending a 10-day blackout of VIA's channels for DTV's 20 million subscribers. Bloomberg reports the new deal is worth over $600 million in annual in affiliate fees, which amounts to a 20% increase in value over the new carriage term (or low single digits annualized growth). This would be well below recent trends. In the last four quarters, VIA has achieved affiliate fee growth of 16.4%, significantly above what is now implied. Our current projections call for 10.8% affiliate revenue increases in 2013, which also seems high in the context of the DTV deal. As a comparison, we are modeling 2013 affiliate revenue increases of 5.1% and 5.6% for Disney (NYSE: DIS) and Time Warner (NYSE: TWX), respectively. Weaker fees compound the headwinds VIA faces with weaker ad revenue."
"Vicious Cycle – The DTV dispute highlights the potential for a broader vicious cycle from OTT adoption and reinforces our view that distribution is gaining an edge on content. We see a tipping point where OTT content sales lower ratings/ad revenues, which may be spilling over to affiliate fees. This pressure increase the reliance on OTT sales that could perpetuate the vicious cycle."
For an analyst ratings summary and ratings history on Viacom click here. For more ratings news on Viacom click here.
Shares of Viacom closed at $46.41 yesterday, with a 52 week range of $41.72-$49.85.
Join StreetInsider.com FREE and get immediately alerted when news breaks on your stocks and other market items - JOIN NOW
*NEW - Download StreetInsider's FREE iPhone and iPad App - Click Here
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