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CBS to Launch Standalone Showtime Streaming Service

At its third-quarter 2014 earnings conference call, CBS Corporation (CBS) announced its plan to launch an independent streaming service for its premier channel Showtime, somewhere in 2015. Moreover, the company inked an agreement with Sony Corp (SNE) to stream some of its content on the latter’s online TV service.

The company refrained from providing any further details on these developments. Additionally, the company launched its second over-the-top news channel (advertisemnt-supported) CBSN a day after it posted better-than-expected results.

CBS Corp already provides streaming service on CBS All Access, launched last month, for a monthly subscription of $5.99. The service offers access to the network’s current as well as previous shows. However, the company’s lucrative sports content is available on CBS All Access as contractual agreement with sports authority prohibits it.

The development follows the announcement made by Time Warner Inc. (TWX), at its Investors’ Day, last month, to launch an independent streaming service of its extremely popular channel HBO in 2015. HBO and Showtime are rival TV channels.

CBS Corp., like Time Warner, is targeting the estimated 10 million Americans who have access to internet but do not subscribe to cable. The group consists mostly of ‘millennials’ who have moved to internet TV.

For some time now, streaming services like Netflix, Inc. (NFLX), Hulu, Amazon Prime Instant Video (AMZN) and YouTube have made internet TV quite popular, this along with rising cable bills have resulted in large number of cord cutters.

With so many streaming services in the offing, it is not likely to go down well with the cable operators. Recently, satellite operator DISH Network had a contract dispute with Time Warner, which ended with the former dropping many Turner broadcasting channels including CNN.

Moreover, ahead of the upcoming contract renewal with DISH, CEO Leslie Moonves said that he was making sure CBS Corp gets fair value for its content.

It remains to be seen as to what happens when CBS Corp and DISH Network sit across the table for negotiation this November. But there is one thing is for sure, with the launch of these streaming services the Television landscape will never be the same.

Though CBS Corp. currently carries a Zacks Rank #4 (Sell), we expect an upward revision in rank soon given all these positive developments.

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