Advertisement
Canada markets closed
  • S&P/TSX

    21,639.10
    -59.00 (-0.27%)
     
  • S&P 500

    5,431.60
    -2.14 (-0.04%)
     
  • DOW

    38,589.16
    -57.94 (-0.15%)
     
  • CAD/USD

    0.7281
    +0.0002 (+0.03%)
     
  • CRUDE OIL

    78.49
    -0.13 (-0.17%)
     
  • Bitcoin CAD

    91,486.51
    +748.45 (+0.82%)
     
  • CMC Crypto 200

    1,382.47
    -35.40 (-2.50%)
     
  • GOLD FUTURES

    2,348.40
    +30.40 (+1.31%)
     
  • RUSSELL 2000

    2,006.16
    -32.75 (-1.61%)
     
  • 10-Yr Bond

    4.2130
    -0.0250 (-0.59%)
     
  • NASDAQ

    17,688.88
    +21.28 (+0.12%)
     
  • VOLATILITY

    12.66
    +0.72 (+6.03%)
     
  • FTSE

    8,146.86
    -16.81 (-0.21%)
     
  • NIKKEI 225

    38,814.56
    +94.06 (+0.24%)
     
  • CAD/EUR

    0.6799
    +0.0025 (+0.37%)
     

With new Charter Spectrum distribution deal, Paramount breathes a sigh of relief

LOS ANGELES, CA - OCTOBER 19: The Melrose Gate of Paramount Pictures Studio located at 5555 Melrose Ave in Hollywood. A sexual assault suspect who was arrested on the Paramount lot early Monday after a 90-minute standoff with police has been identified as Bryan Gudiel Barrios. Fullerton Police Cpl. Billy Phu said that Barrios, 36, is currently hospitalized with non-lethal, self-inflicted knife wounds. Hollywood on Monday, Oct. 19, 2020 in Los Angeles, CA. (Al Seib / Los Angeles Times
Paramount Global reached a new distribution contract for its TV channels, including CBS, with Charter Spectrum. (Al Seib / Los Angeles Times)

Paramount Global and Charter Communications have agreed to a new distribution deal for Paramount's CBS network and cable channels, easing a concern that had threatened to complicate the media company's sale talks.

The last three-year contract covering CBS and Paramount's 25 cable networks expired April 30, but the two sides continued negotiations, sparing Charter's Spectrum customers from another disruptive blackout. Last summer, a breakdown in separate talks between Charter and Walt Disney Co. resulted in Disney channels, including ESPN, going dark for 10 days for Spectrum subscribers.

While Paramount has less pull than Disney, the company still benefits from the strength of its CBS network and its entertainment schedule; news programs, including "CBS News Sunday Morning" and "60 Minutes"; and sports, including golf and the NFL.

ADVERTISEMENT

As part of the deal, the companies said ad-supported versions of Paramount+ Essential and BET+ Essential would be included at no additional cost to Charter’s Spectrum TV customers. Charter also will make Paramount’s direct-to-consumer products available for purchase to its Internet-only customers.

“This innovative deal celebrates our mutual commitment to deliver flexibility, choice and value for audiences everywhere, and we look forward to bringing even more of our fan-favorite programming to Spectrum customers through our direct-to-consumer streaming services for the first time," Ray Hopkins, Paramount's president of U.S. Networks Distribution, said in a statement.

Read more: How a negotiation over cable fees could weigh on Paramount's sale

The Charter deal marked the first major accomplishment for Paramount since Chief Executive Bob Bakish was ousted late last month and three division leaders, comprising the "Office of the CEO," began running the company.

For investors, it was a shot of good news during a turbulent cycle as Paramount board members have been mulling whether to pursue a complicated and controversial two-phase merger with David Ellison's Skydance Media or accept a separate buyout bid from Sony Pictures Entertainment and Apollo Global Management.

Sony and Apollo have offered $26 billion, including the assumption of debt. Sony and Apollo are known to be cost-conscious buyers; they want to scrutinize Paramount's financial picture, including details of the Charter distribution pact, before arriving at a valuation, according to people close to the process who are not authorized to comment publicly.

Both Charter and Paramount had plenty to lose if they had been unable to reach a new agreement.

Charter's stock has tumbled more than 25% year-to-date, weighed down by concerns about weakness in its broadband internet and wireless phone business, as well as further erosion in pay TV subscribers — a trend that has had wide-reaching financial implications.

Read more: Shari Redstone was poised to make Paramount a Hollywood comeback story. What happened?

Audiences have been migrating away from general-entertainment cable channels, including BET, MTV and Nickelodeon, making them less valuable to distributors such as Charter.

Analysts have long viewed Paramount's channels as among the weakest in the industry because they largely run low-cost reality programming, a genre that television executives say has suffered from oversaturation and higher-end competition from streaming companies, such as Netflix.

Recent Nielsen ratings shows how Paramount's cable channels have fallen out of favor with audiences. Only three of the company's channels — TV Land, TV Land Classic and Nick at Night — rank in the Top 20, in terms of total viewers. TV Land plays reruns of series including "King of Queens," "Seinfeld" and "Everybody Loves Raymond." Comedy Central and the Paramount Network lag behind, rounding out the Top 30.

Connecticut-based Charter's executives, including Chief Executive Christopher L. Winfrey, were loath to agree to a new pact that would significantly raise fees for subscribers who continue to pay for their channel bundles. Winfrey also has demanded that programmers give Spectrum customers access to subscription services that provide network programming.

“From the outset, Paramount has embraced Charter’s goal of evolving the video distribution model, and we have appreciated their willingness to collaborate on a solution that benefits our mutual customers and the video industry as a whole,” said Tom Montemagno, Charter's executive vice president of programming acquisition.

Sign up for our Wide Shot newsletter to get the latest entertainment business news, analysis and insights.

This story originally appeared in Los Angeles Times.