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DIRECTV, WeatherNation Ink Deal

Zacks Equity Research

DIRECTV (DTV), one of the largest U.S. satellite TV operators, signed a multi-year deal with WeatherNation to broadcast weather forecasts and related events. The agreement came in after DIRECTV had stopped broadcasting The Weather Channel in Jan 2014 due to programming fee settlement conflicts. Following this development, DIRECTV shares declined 0.8%.

However, DIRECTV has recently initiated talks with The Weather Channel to resolve the programming fee dispute. The Weather Channel is jointly controlled by NBC universal, which is part of Comcast Corp. (CMCSA), and two private equity firms, namely, Blackstone Group LP (BX) and Bain Capital Partners LLC.In 2011, DISH Network Corp. (DISH) also stopped transmitting the channel due to a programming fee disagreement.

According to industry researcher SNL Kagan, in 2012 and 2013, The Weather Channel received an average fee of 13 cents a month per subscriber. The content provider now seeks a fee hike of a penny, a month per subscriber. According to rating firm Nielsen, The Weather Channel has lost more than 19% of its audience since 2011.

One of the reasons behind The Weather Channel’s declining viewership is the growing popularity of its own smartphone and tablet applications with a substantial rise in demand for the devices.

Notably, DIRECTV’s recent accord with the WeatherNation will provide weather-related information and radar imagery to the former’s 20 million subscribers.

DIRECTV currently has a Zacks Rank #2 (Buy). Elimination of low-quality customers, launch of TV Everywhere and online video streaming services are acting as catalysts for the company. This is evident from the 19.5% positive earnings surprise posted by the company in the last reported quarter.

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