Weekly Pay-TV Notes: Comcast-TWC Merger Called Off, Dish Signs Deal With The Weather Channel

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The pay-TV industry saw significant activity this week, with Comcast announcing that its merger agreement with Time Warner Cable has been terminated. Additionally, Dish Network signed a major content deal with The Weather Channel. On that note, we discuss below these developments related to the pay-TV companies over the past few days.

Comcast Calls Off Merger Plans With TWC

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Comcast announced Friday that its merger agreement with Time Warner Cable and its related transactions agreement with Charter Communications, Inc. have been terminated. [1] The proposed merger consistently faced stringent opposition from the general public, industry players as well as public interest and consumer-advocacy groups since its announcement. There had been indications in the last few days that the deal would find it difficult to get the required regulatory approvals, with staff attorneys at the U.S. Justice Department’s antitrust division stating that they were nearing a recommendation to block the deal, and the FCC staff recommending a procedural move that would put the merger in jeopardy. [2] [3] With the dissenting voices increasing, Comcast has decided that best step would be to drop the merger plans altogether. There is no break-up fee involved so the pay-TV provider will not be penalized for walking away from the deal.

Comcast’s stock gained around 1.4% over the week through Thursday. We currently have a price estimate of $62.4 for Comcast. For the year 2015, we estimate revenues of $71.6 billion, compared to consensus estimate of $71.4 billion, and EPS of $3.26, compared to a consensus estimate of $3.24.

Dish Signs Content Deal With The Weather Channel

Dish Network (NASDAQ:DISH) announced that it has reached a multi-year agreement with Outside Television which will provide Dish customers with continued access to The Weather Channel and its interactive app on select set-top boxes. [4] The agreement also includes over-the-top (OTT) streaming rights for live and Video-On-Demand content. Resultantly, The Weather Channel will be launched on Dish’s streaming service Sling TV by this July. Pricing and packaging information has not been disclosed and the same will be announced at the launch of the channel. This agreement is the latest in a series of content deals that Dish has closed in the past few weeks. The pay-TV provider had earlier signed content deals with MLB Network and Outside Television among others.

Dish Network’s stock gained around 0.5% over the week through Thursday. We currently have a price estimate of $79.80 for Dish Network. For the year 2015, we estimate revenues of $15.3 billion, compared to the consensus estimate of $15.2 billion, and EPS of $2.1, compared to the consensus estimate of $1.7.

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Notes:
  1. COMCAST/TIME WARNER CABLE/CHARTER TRANSACTIONS TERMINATED, April 24, 2015, Comcast Press Release []
  2. U.S. Antitrust Lawyers Said Leaning Against Comcast Deal, April 17, 2015, Bloomberg []
  3. FCC Staff Recommends Hearing on Comcast-Time Warner Cable Merger, April 23, 2015, Wall Street Journal []
  4. DISH and The Weather Channel Sign Multi-Year Renewal, Dish Press Release []