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Charter (CHTR) Settles Carriage Fee Dispute with Fox News


Cable multi-service operator (MSO), Charter Communications Inc. CHTR settled a carriage fee dispute with Fox News, a unit of Twenty-First Century Fox Inc. FOXA. However, neither of the companies has forwarded any comments.

This is in relation to the suit filed by Twenty-First Century Fox against Charter Communications in Jul 2016. Fox News sued the cable operator, claiming that the company breached its contract by applying Time Warner Cable’s channel carriage rates (based on older agreement). Charter Communications was not abiding by an agreement it signed with Fox to distribute Fox News Channel and Fox Business Network.

Ever since Charter Communications acquired Time Warner Cable and Bright House Networks in 2016, the company has been trying to acquire better deals from content providers and programmers. The cable MSO was pressing to leverage Time Warner Cable’s more favorable Fox networks retransmission deal instead of the original contract which has already expired.

Charter Communications faced similar breach of contract suits from Univision and Showtime. The dispute with Showtime appears to have been resolved in May, but the Univision case is pending. Hispanic TV network, Univision Communications Inc., is a subsidiary of Mexican cable TV and media behemoth, Grupo Televisa SA TV.

We expect Charter Communications to quickly resolve all such disputes and focus on its growth strategies. While the mobile venture with Comcast Corp. CMCSA boosts Charter Communications’ wireless services businesses, we believe that competitive threats posed by online video streaming providers’ cheap source of TV programming are a concern. Such mixed ventures complement Charter Communications’ current Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Latest Patent Licensing Disputes

In Jun 2017, Comcast lost a patent licensing dispute against TiVo Corporation (TIVO). Comcast and its vendor partners were charged for violating six patents related to digital video recording and interactive program guides through Comcast’s X1 technology. The complaint was filed by Rovi Corp. against the cable MSO to the International Trade Commission (ITC) in Apr 2016. Rovi filed the suit before it purchased TiVo for $1.1 billion and merged as a new company, while carrying TiVO’s brand.

Qualcomm Inc. QCOM settled a licensing dispute with BlackBerry Limited (BBRY) by paying U.S. $940 million, on May 31. This is in relation to the over-payment by BlackBerry to Qualcomm in royalty payments from 2010 to 2015 under terms of a licensing deal.

Price Performance

Over the past three months, share price of Charter Communications rallied 0.61%, outperforming the Zacks categorized Cable Television industry’s 2.94% decline.

The multi-channel U.S. video market has become extremely saturated and competitive. Online video streaming service providers pose severe threat to cable TV operators due to their cheap source of TV programming. We believe these reasons have led to the Zacks Cable Television industry’s downfall.

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