Nomura Securities on U.S. Media, Cable & Satellite: Tier This...The Disney-Comcast Blueprint
DIS Hot Sheet
Rating Summary:11 Buy, 7 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 20 | Down: 11 | New: 38
Nomura Securities on U.S. Media, Cable & Satellite: Tier This
Disney-Comcast Blueprint
Analysts, Michael Nathanson, Mike McCormack, said, "Disney (NYSE: DIS) and Comcast (Nasdaq: CMCSK)(Nasdaq: CMCSA) announced a long-term (10 years according to the Wall Street Journal) distribution agreement extension that will deliver Disney’s networks to Comcast’s TV customers on all devices including the television set, online, tablets and handheld devices. Importantly, license fee schedules for different services under the deal will be phased in over time, allowing Disney to continue to benefit from solid affiliate fee growth as the new services are delivered. For Disney, this agreement is beneficial in three ways: 1) it supports Disney’s most important revenue stream, 2) it is paying for Disney’s brands in a multi-platform world and, 3) ESPN will not be tiered. From the cable side of the equation, we expect 8%-9% programming expense growth to cause persistent margin pressure for Pay TV providers. However, with capital intensity declining, we see strategic value to securing enhanced rights to differentiate video and broadband products."
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Disney-Comcast Blueprint
Analysts, Michael Nathanson, Mike McCormack, said, "Disney (NYSE: DIS) and Comcast (Nasdaq: CMCSK)(Nasdaq: CMCSA) announced a long-term (10 years according to the Wall Street Journal) distribution agreement extension that will deliver Disney’s networks to Comcast’s TV customers on all devices including the television set, online, tablets and handheld devices. Importantly, license fee schedules for different services under the deal will be phased in over time, allowing Disney to continue to benefit from solid affiliate fee growth as the new services are delivered. For Disney, this agreement is beneficial in three ways: 1) it supports Disney’s most important revenue stream, 2) it is paying for Disney’s brands in a multi-platform world and, 3) ESPN will not be tiered. From the cable side of the equation, we expect 8%-9% programming expense growth to cause persistent margin pressure for Pay TV providers. However, with capital intensity declining, we see strategic value to securing enhanced rights to differentiate video and broadband products."
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