Weekly Media Notes: Sony And Viacom Ink A Deal For Web Based Television Service

September 12th, 2014 by Trefis Team
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Last week saw a development in the television industry with Sony moving a step closer to Web-based TV. The company signed an agreement with media house Viacom (NASDAQ:VIA) to carry 22 channels. [1] While the financial details of the deal were not disclosed, it is a step in the right direction for Viacom, as it would offer another pocket of revenues for the content it creates. On that note, we discuss below some key developments around this story.

Viacom and Sony have reached an agreement to offer streaming of Viacom’s programming on Internet based television. Sony is working on a bundle with more than 100 channels that it plans to offer on its gaming consoles and Internet connected television sets. Viacom is home to some of the popular networks such as Nickelodeon and MTV that will be offered on Sony’s TV service. [2]

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Sony is not alone to offer Internet based television. Dish Network (NASDAQ:DISH) plans to roll out the new television service this year and has already inked a deal with Disney (NYSE:DIS). Separately, it has been learned that Disney and Twenty First Century Fox (NASDAQ:FOX) are also in discussions to supply Sony with their content. [3] It would be wise to do so, as it will not only increase the revenues for these media giants but also provide larger audience for their content, as these services target younger audience and the cord-cutters.

We estimate revenues of around $14.41 billion for Viacom in 2014 and EPS of $5.71. We maintain a $92 price estimate for Viacom’s shares, which is around 15% above the current market price.

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Notes:
  1. Viacom and Sony Reach Landmark Internet Distribution Agreement, Viacom’s Press Release, Sep 10, 2014 [↩]
  2. Sony and Viacom Reach Web-TV Deal, The Wall Street Journal, Sep 10, 2014 [↩]
  3. Disney, Fox Weigh Joining Sony’s Web-TV Service, Bloomberg, Sep 11, 2014 [↩]