TV network giant, Viacom Inc. (VIAB) recently entered into a new content sharing agreement with Sony Corporation (SNE). Per the deal, Viacom will give access to Sony to stream its live shows on Internet through its TVs, game consoles and Blu-ray players.
Increased deployment of 4GLTE services coupled with higher usage of smartphones and tablets have forced most channel broadcasters to view shows on Iinternet as it offers more flexibility to its viewers. Moreover, low-cost Internet video streaming companies like Netflix Inc. (NFLX), Hulu and YouTube have become major threats to the overall pay-TV industry. In order to counter such threats, Sony has signed this deal. Sony is also planning to strike similar deals with other channel majors like Time Warner Inc. (TWX), Disney and CBS.
On the other hand, increasing online video streaming services will hugely benefit Viacom in terms of higher affiliated fee revenues as the company has a huge collection of movies from Paramount and runs popular networks like MTV, VH1, Comedy Central and Nickelodeon.
In the recently concluded third quarter of 2013, Viacom reported strong financial results despite missing the Zacks Consensus Estimate. Both domestic and worldwide affiliate revenues rose 28% and 26%, respectively, as compared with the prior-year quarter.
Viacom is planning to renew its agreement with NFLX at a higher rate, which will drive the domestic affiliate revenues further. Moreover, Viacom’s top line will likely witness a huge improvement as more satellite and cable TV service providers continue to increase their VOD movie services.
Currently, Viacom has a Zacks Rank #3 (Hold).
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