Since 2003, Universal Pictures has been selling its exclusive movies rights to HBO channel in order to view their movies on the latter’s network. So, with the expiry of the contract nearing in 2015, Universal Pictures plans to further renew its agreement for the next 10 years. However, neither of the two companies have revealed the financial terms of the deal.
Such an early renewal of contract, especially by HBO has stemmed from the recent deal signed between Netflix, Inc. (NFLX) and The Walt Disney Company’s (DIS) Disney Movies. To stay ahead of the race, HBO is planning for an early renewal of contract with different movie studios.
Universal Studios or better known as Universal Pictures released 17 movies in 2012 with a total gross collection of more than $1.3 billion. Last year, it became the sixth largest distributor of Hollywood movies with a market share of 12.27%.
Universal Pictures had a pretty decent last year. Movies like Ted and Doctor Seuss' The Lorax garnered huge revenue for the studio. Moreover, the company has got several movies lined up for release in 2013. So, keeping these factors in mind, HBO is willing to extend its contract with the studio, hence giving not a single chance to other TV channels or video streaming companies to strike any fresh deal with the studio.
Currently, we are maintaining our long-term Neutral recommendation on Comcast. It has a Zacks#3 Rank, implying a short-term (Hold) rating on the stock.Read the Full Research Report on NFLX
More From Zacks.com