Viacom-TWC Deal a Mutual Win, Analyst Says

Jan 2, 2009  •  Post A Comment

Paying more to Viacom to carry its 19 cable networks was a good move for Time Warner Cable as well as a win for Viacom, an analyst said Friday.
Time Warner Cable and Viacom reached a last minute deal Jan. 1 that keeps Viacom’s networks on the operator’s cable systems by reportedly agreeing to pay a higher fee for the channels.
“The potential impact from negative headlines could have hurt [Time Warner Cable] stock and the blackout might have resulted in slower subscriber growth or even higher churn,” said Thomas Eagan of Collins Stewart.
“While some may view this as a slippery slope opening the door up for other cable networks to seek higher fees, we don’t believe that many other high profile/powerful network can make that same claim” as Viacom did about being underpaid relative to its viewership, Mr. Eagan wrote in a research note Friday.
“Additionally, TWC may have received some concessions in the new contract, specifically, TWC could get better (earlier windows) and deeper (more titles) access to the cable networks’ programming for its On-Demand channels,” Mr. Eagan said.
The companies have not disclosed financial details of the tentative agreement, but even if Viacom got everything it was seeking in terms of a fee increase, it would have only a marginal impact on Time Warner Cable, Mr. Eagan said.
(Editor: Baumann)

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