Will Charter Communications (CHTR) Lose Univision Lineup?

Leading cable MSO (multi service operator) Charter Communications Inc. CHTR is on the verge of a black out of TV channels controlled by Univision Communications Inc. The Hispanic TV broadcaster, which is a subsidiary of Mexican cable TV and media behemoth, Grupo Televisa SA TV, is currently engaged in a retransmission tussle with the cable MSO which is already subject to litigation. In Aug 2016, Univision sued Charter Communications accusing the latter of breaching its TV carriage contracts.

Ever since Charter Communications acquired Time Warner Cable and BrightHouse in 2016, the company has been trying to get better deals from content providers and programmers. The cable MSO is pressing to leverage Time Warner Cable’s more favorable Univision retransmission deal, instead of the original Charter Communications contract which has already expired. Notably, the Time Warner Cable deal is valid still 2022.

In Jul 2016, Fox News, a unit of Twenty-First Century Fox Inc. FOXA, sued the cable operator claiming the company breached its contract by trying to apply Time Warner Cable’s channel carriage rates and was not abiding by an agreement it signed with Fox to distribute Fox News Channel and Fox Business Network.

In the same month, leading U.S. media giant CBS Corp. CBS also filed breach-of-contract lawsuits against Charter Communications for the same reason. Interestingly, Charter Communications has structured its 2016 mega acquisitions in such a way that the newly combined MSO appears under the control of Time Warner Cable.

Meanwhile, per a recent report by The Wall Street Journal, Verizon Communications Inc. VZ, the largest telecom operator in the U.S. is exploring strategic options to acquire Charter Communications, the second largest cable MSO in the nation. Although The Wall Street Journal stated there is no guarantee that the deal will materialize, a combination of two of the industry's biggest companies may become the latest one in the ongoing consolidation trend of the telecom-pay-TV-media space.

Price Performance of Charter Communications

2016 was extremely good for Charter Communications’ investors. In the last one year, the stock returned 67.10%, outshining the Zacks categorized Cable TV  industry’s gain of 38.10%. Nevertheless, cable TV industry is facing massive cord-cutting threat and Charter Communications is no exception to the trend. We believe that is the primary reason behind the stock currently carrying a Zacks Rank #3 (Hold). You can see  the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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CBS Corporation (CBS): Free Stock Analysis Report
 
Verizon Communications Inc. (VZ): Free Stock Analysis Report
 
Grupo Televisa S.A. (TV): Free Stock Analysis Report
 
Charter Communications, Inc. (CHTR): Free Stock Analysis Report
 
Twenty-First Century Fox, Inc. (FOXA): Free Stock Analysis Report
 
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