Comcast Corporation (NASDAQ:CMCSA), a public listed Nasdaq stock has been granted rights by cable network owners to offer their channels countrywide. This is expected to be a shot in hand for U.S’s largest cable operator against its rivals.
The rights allow the company to sell its video services outside its regional territories for the first time including Philadelphia, Boston and Chicago. This is according to sources privy to the matter.
In many cases Comcast acquired these rights through “most favored nation” quotations in contracts which allowed the company to share the market with online distributors. Since the company does not offer cable TV services in markets like Los Angeles and New York, it may start offering the channels as an on online service.
In some cases, Comcast requested for the rights as part of the negotiations with the programmer. Currently the company has no plans to plans of offering a video service countrywide as it still sees opportunities to attract more cable TV subscribers in its territories.
By accumulating countrywide rights, the company gains a hedge in a dynamic world where internet services like DISH Network Corp (NASDAQ:DISH)’s Sling TV and AT&T Inc. (NYSE:T)’s DirecTV are flourishing. Comcast’s cable segment contributes 62% of the company’s total revenue. Video services accounts for around half of the cable unit’s revenue.
Providers of cable TV are required to separately negotiate for rights from programmers so as to offer their channels outside their territories. Since programming rights last for several years, it would be ideal for Comcast to secure the rights just in case there is a change in business plans.
Comcast has not secured any OTT rights from partners with which it has signed long-term deals. The company had negotiated an extension deal with CBS in 2010 as well as ESPN in 2012. Both these deal will expire beyond 2020. The company will be required to renegotiate these deals in the event that it wants to speed up its plans for a countrywide TV service. Offering countrywide TV will enable Comcast to favorably compete in the market in addition to being able to offer a variety of offerings to its subscribers.