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Viacom's stock falls as AT&T-DirecTV may drop its networks, but BTIG warns DirecTV may have more to lose

Tomi Kilgore

Shares of Viacom Inc. dropped 4.2% in morning trade Wednesday, to pace decliners in the communications services sector, in the wake of the media company's warning of a disruption in service for those accessing its TV networks through AT&T Inc.'s DirecTV. Viacom's stock has now shed 5.8% this week. Meanwhile, AT&T's stock has lost just 0.6% this week. Viacom said Tuesday that despite "a series of offers" made to AT&T-DirecTV to reach a new carriage agreement, which expires March 22, AT&T's "unwillingness to engage in constructive conversations" could force a disruption of service. BTIG analyst Richard Greenfield said history suggests that DirecTV, not Viacom, has more to lose if DirecTV drops Viacom networks. The last time DirecTV dropped Viacom networks in 2012, it lost subscribers and market share to competitors. Viacom's stock has gained 2.4% year to date and AT&T shares have climbed 6.8%, while the SPDR Communications Services Select Sector ETF has rallied 13.3% and the S&P 500 has rallied 12.7%.