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AT&T and Viacom Reach Content Distribution Agreement

Zacks Equity Research
Updated

AT&T Inc. T, the second largest wireless carrier in the U.S., recently reached an agreement with mass media service provider Viacom Inc. VIAB. Per the new distribution deal, Viacom will continue to provide media content to AT&T’s satellite and fiber-based DIRECTV and U-Verse subscribers. The financial details of the deal have been kept under wraps.

A Profitable Pact

As traditional TV viewing has been on a steady decline, especially among the younger generation, Viacom has been focusing on building content for channels like Comedy Central, Nickelodeon to MTV and Vh1 for the millennial population. However, growing preference of on-demand shows on mobile devices has given rise to a number of content steaming service providers like Hulu and Netflix Inc. NFLX. As a result, Viacom’s channel ratings by Nielsen Ratings have been on the decline, hurting advertisement revenues as well as subscription fees from cable companies.

Meanwhile, AT&T’s leading global position as a pay TV provider is likely to benefit Viacom in terms of subscribers as well and ad revenues. However, AT&T is poised to face competitive challenges from other media streaming service providers and rival Verizon Communications Inc. VZ that recently launched its own content streaming service – ‘Go90’.

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The Road Ahead

While AT&T is focusing on consolidating its position in the telecom industry and outrun Verizon to become the largest wireless carrier, Viacom is seeking an innovative solution amid the ongoing industry transition. However, this deal’s contribution toward the respective objectives of the companies is yet to be seen.

Viacom currently carries a Zacks Rank #4 (Sell) while AT&T has a Zacks Rank #3 (Hold).

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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
AT&T INC (T): Free Stock Analysis Report
 
NETFLIX INC (NFLX): Free Stock Analysis Report
 
VERIZON COMM (VZ): Free Stock Analysis Report
 
VIACOM INC-B (VIAB): Free Stock Analysis Report
 
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Zacks Investment Research