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Comcast (CMCSA) Disney Renews Content Carriage Agreement

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Comcast (CMCSA - Free Report) and The Walt Disney (DIS - Free Report) recently announced the renewal of their content carriage agreement. The agreement will continue to make Disney’s lineup of news, sports, kids, family and general entertainment programming available to the customer of Comcast’s Xfinity TV.

The renewed agreement marks the extension of Comcast’s existing relationship with Disney. Comcast will distribute the ACC Network to its Xfinity customers, which will provide the followers of the Atlantic Coast Conference access to the multiplatform network in the upcoming weeks.

The multi-year agreement includes the continued distribution of Disney’s cable channels, such as the Disney branded channels, the ESPN networks, the FX Networks and the National Geographic channels.

The renewal further includes the continued distribution of the SEC Network and the city-specific retransmission consent for the ABC Owned Television Stations.
 

 

In March 2021, Comcast launched Disney+ and ESPN+ on Xfinity TV, with which the agreement renewal will continue to be available to the customers.

Expanding Content Portfolio to Aid Comcast

Comcast’s expanding content portfolio will boost the top line growth. Apart from the extended Disney partnership, the company partnered with ViacomCBS (VIAC - Free Report) to launch a European streaming service in 2022 called SkyShowtime.

Comcast and ViacomCBS will roll out the service in 20 European countries, including Spain, Portugal and Netherlands. It will include show libraries from Sky and NBCUniversal and from ViacomCBS brands like Nickelodeon, Showtime and Paramount Pictures. SkyShowtime will include the old and new releases of the companies, having more than 10,000 hours of content.

Comcast is suffering from cord-cutting. Its streaming service Peacock is facing stiff competition from the likes of Netflix (NFLX - Free Report) , Disney+, HBO Max and Paramount+ from ViacomCBS.

Comcast’s shares have underperformed Netflix on a year-to-date basis. Shares have declined 4.6% year to date against Netflix’s rise of 18.7%. ViacomCBS and Disney’s shares have declined 16.9% and 20.0%, respectively, year to date.

Netflix is still dominating the streaming market. In the third quarter, Netflix added 4.38 million paid subscribers globally compared with 2.2 million in the year-ago quarter and beat the guidance of 3.5 million paid-subscriber addition. Netflix expects to end the fourth quarter with 222.06 million paid subscribers globally, indicating growth of 9% from the year-ago quarter’s levels.

Disney recently revealed that it will increase its total content budget by $8 billion year over year, reaching a total of $33 billion in 2022. The decision was based on the intention to support its direct-to-consumers services, which primarily includes Hulu, Disney+ and ESPN+.

Disney plans to broadcast approximately 50 titles for both theatrical release and streaming in fiscal 2022. Walt Disney Animation Studios will release ‘Baymax’ and ‘Moon Knight’ next year, its first-ever animated series. It also has plans to launch a new Marvel series on Disney+ in fiscal 2022.

ViacomCBS’ solid cable network portfolio is a major growth driver. The growing traction of BET, Comedy Central, Nickelodeon and Showtime is anticipated to boost the top line. ViacomCBS recently announced the acquisition of a majority stake in Fox TeleColombia and Estudios TeleMexico from Disney.

Besides its advertising revenue growth, Comcast is also witnessing growth in broadband subscribers and growing momentum in its wireless business. Peacock, its streaming service, gained significant traction amid the coronavirus led media-consumption.

Comcast currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.