On a down day for most media stocks and the broader markets, Altice USA shares perked up as the cable company dug in for a carriage standoff with Disney that could go down to the Saturday night wire.
In late-session trading, the company’s shares were up more than a percentage point, to $27.64, on lighter-than-average volume. The current level is not much better than the 52-week low of $26.60 a share, but the gains went against the grain on a day when the Dow Jones Industrial Average and Nasdaq each shed more than 70 points. Disney stock also ticked up nearly a point to $99.43.
Wall Street and the TV industry are watching the stalemate closely, given the angst over cord-cutting and Disney’s strategic maneuvers as it cuts its own cord, to Netflix, and preps two new stand-alone streaming services. Altice, a France-based telecom giant, owns Optimum and Suddenlink and has 4 million U.S. customers, ranking fourth among cable operators. The idea of it refusing to meet Disney demands for increased carriage fees for channels including ABC and ESPN would be a game-changer. The two companies late last week issued dueling statements asserting their positions. Neither amended them today ahead of the October 1 expiration of the contract.
One longtime Disney bear, BTIG analyst Rich Greenfield, took aim at the company again today. In a report partly headlined “Bob Iger Wants YOU to Pay for Disney’s Mistakes,” he said Disney “should be taking this opportunity to reorient their broadcast/cable network assets to compete in a direct-to-consumer, multi-platform world. Unfortunately for consumers, Disney and [CEO Bob] Iger have not taken our advice.” The company, Greenfield asserts, is “attempting to fleece consumers for upwards of $15 per subscriber per month for their suite of broadcast and cable networks (including regional college sports networks that virtually no consumers want.”
Brian Wieser, an analyst with Pivotal Research Group, issued a different report today but one with distinctly ominous notes for Disney and other TV programmers. The rise of skinny bundle services such as the ones Hulu, YouTube, DirecTV and Sling offer via the internet, contributed to a 3.1% decline in pay TV subscriptions in the October forecast from Nielsen, despite an increase of 1% in total TV households. ESPN and ESPN2 each dipped by 3.7%.
A spokesperson for Altice said viewership of ESPN programming by Optimum customers “has been declining in the double digits for years yet they’re asking for exorbitant rate increases for ESPN, and they are demanding double the rates for ABC for the same content they offer today.”
A Disney rep said the company had not revised its positioning as of Monday, reiterating the company’s earlier assertions that the “typical” Optimum customer pays Altice $160 or more each month for service, “and the bulk of that money goes into their pocket.”
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