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AT&T (T) Inks New Content Carriage Agreement With Starz

Zacks Equity Research

AT&T Inc.’s T subsidiary, AT&T Communications, has entered into a new multi-year content carriage agreement with Starz — a Lions Gate Entertainment Corp.’s LGF.A media and entertainment firm. Financial terms of the deal were not disclosed. AT&T’s customers can now get more choice and value in addition to compelling amusement.

This deal secures rights for AT&T to offer the full suite of STARZ and STARZ ENCORE premium linear and HD channels, On-Demand, HD On-Demand and online services to its DIRECTV, AT&T TV and U-verse video platform customers. Markedly, the comprehensive agreement gives millions of AT&T subscribers access to Starz’s acclaimed premium original content and library of blockbuster films.

The news came in a day after the telecom and media giant reached a deal with Nexstar Media Group, Inc. NXST that will bring broadcast feeds back in 97 markets after a two-month dispute. Recently, AT&T resolved a dispute with CBS, which witnessed CBS stations in New York City, Los Angeles and across the nation go dark on DirecTV, DirecTV Now and U-verse cable systems.

Core Focus

AT&T is aggressively building FirstNet for first responders and creating next-generation mobile 5G. Over the past five years, the company has invested around $145 billion in wireless and wireline networks, including capital investments and acquisitions of wireless spectrum and operations. Its fiber network is one of the nation’s largest and connects more Internet of Things devices compared with any other provider in North America.

AT&T intends to deploy a standards-based, nationwide mobile 5G network in early 2020. The company’s 5G service involves utilization of millimeter wave spectrum for deployment in dense pockets, while in suburban and rural areas, it plans to deploy 5G on mid- and low-band spectrum holdings.

Together with technology partners, AT&T has made the world’s first wireless 5G data transfer over millimeter wave using production equipment with a mobile form factor device. At present, the company’s 5G Evolution technology is live in more than 200 markets, and is expected to reach more than 400 markets by the end of 2019.

In the last earnings report, the company’s operating revenues from the Communications segment were $35,508 million, up 0.3% year over year. Service revenues from the Mobility unit improved 2.4% year over year to $14,006 million on the back of subscriber gains and postpaid phone ARPU growth.

Revenues from the Entertainment Group were down 1% to $11,368 million. The segment’s operating income was $8,737 million compared with $8,414 million in the year-ago quarter driven by focus on cost initiatives.

AT&T has long-term earnings growth expectation of 4.4%. Driven by diligent execution of operational strategies, the stock has rallied 23.5% compared with the industry’s growth of 12.4% in the year-to-date period.



AT&T currently has a Zacks Rank #3 (Hold). A better-ranked stock in the industry is Verizon Communications Inc. VZ, carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Verizon surpassed earnings estimates in each of the trailing four quarters, the average positive surprise being 2.6%.

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