SNL Kagan’s Steve Birenberg notes that handful of large media and communications companies are reporting earnings this week, along with several smaller media companies.
The multichannel TV industry business model is going to be a focus, with discussion surrounding Aereo, affiliate-fee negotiations and blackouts, as well as digital rights fees.
Legal issues also will be prominent in conference call Q&A. Aereo won its first round, and its business model feeds into other big-picture issues, especially retransmission fees and programming cost increases. DISH Network Corp.’s Auto Hop trial is also on the front burner. Retransmission fees are again an issue as are advertising strategies.
Here’s a couple of notes re: major companies set to report this week from Birenberg:
Comcast Corp. has avoided the messy affiliate fee battles by signing long-term deals with many network owners. The company is also hedged by its ownership of NBCUniversal Media LLC.
Time Warner Cable has been a leader in experimenting with pricing tiers. Insight into how consumers are responding will be important for the entire industry. The capital allocation story is a bit played out at Time Warner Cable, but an update will surely be important to investors.
Another operator, DIRECTV, will give a glimpse into the competitive environment with DISH and cable companies in the U.S. Latin America has taken the growth mantle at DIRECTV, so sub trends, pricing and general economic impacts in those markets will be the other major focus for investors. I remain long DIRECTV due to the aggressive return of cash to shareholders and rapidly building asset value and cash flow in Latin America.
It seems to me that the way to stave off increases in retransmission fees and programming costs is by creating long-term agreements. Although this doesn’t fix the problem, it certainly keeps both parties happy, at least for a while. In the end, the customers have to deal with the repercussions of these agreements. I like that Dish decided to keep their customers’ interests in mind when they launched the Auto Hop feature. Since I work for them, I found out about Auto Hop long before it was made available, and I’ve been quite the fan of having the choice to watch commercial-free TV. I’m also becoming a fan of network TV again, so I hope that some kind of agreement will be made in the case, otherwise I’ll just have to go back to fast-forwarding through the commercials manually.
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