NEW YORK – Warner Bros. Discovery Inc. (NASDAQ: NASDAQ:WBD) and Charter Communications , Inc. (NASDAQ: NASDAQ:CHTR) have entered into a multi-year distribution agreement that integrates linear video with streaming services. This partnership, announced on September 12, 2024, is set to enhance the video bundle offerings, providing customers with greater value and flexibility to match their viewing habits.
Under the agreement, Charter's Spectrum TV Select packages will include the ad-supported version of Max (Ad Lite), featuring HBO, Max, and Discovery+ content, without additional charges. This strategic move adds nearly $60 per month of retail direct-to-consumer (DTC) value for Spectrum customers, complementing other services like Disney+, ESPN+, and Paramount+.
David Zaslav, President and CEO of Warner Bros. Discovery, highlighted the significance of the partnership, emphasizing their content's value and the goal to offer consumers more access to their comprehensive offerings. Chris Winfrey, President and CEO of Charter Communications, echoed the sentiment, stating that the inclusion of Max and Discovery+ bolsters Spectrum's commitment to providing value and flexible package options to customers.
The collaboration also extends Spectrum's carriage of Warner Bros. Discovery's linear networks, including CNN, TNT, and HGTV, and positions Max as a "preferred partner" for Spectrum's marketing of DTC apps and bundles. Spectrum's full deployment of its DTC distribution to broadband customers is planned for 2025, following the inclusion and upgrade offers set for 2024.
While financial details of the agreement were not disclosed, it is clear that both companies aim to adapt to the evolving media landscape by offering a more resilient video ecosystem. This long-term agreement is based on a press release statement and marks a significant development in the media distribution industry.
In other recent news, Charter Communications has had notable developments. Citi has upgraded its stance on Charter Communications from Sell to Neutral, citing a stabilized broadband environment and a decrease in valuation. The company is aiming for a significant enhancement in its EBITDA by 2024, driven by cost-cutting initiatives. However, Citi remains cautious about Charter's broadband volume expectations for 2025.
Charter has also seen changes in leadership, with the recent appointment of Simon Cassels as Senior Vice President and Chief Creative Officer for the Spectrum brand, a move intended to stimulate growth and enhance the brand's image. Meanwhile, Charter has agreed to pay a $15 million fine to the FCC due to non-compliance with network and 911 outage notification rules during several outages in 2023.
Financially, Charter reported mixed results in its latest earnings call, with losses in its internet segment but resilience in new mobile lines and growth in adjusted EBITDA. Investment firms Evercore ISI and Rosenblatt have adjusted their price targets for Charter, with Evercore ISI raising its target to $425.00 and maintaining an Outperform rating, while Rosenblatt increased its target to $329, keeping a Neutral rating. These recent developments reflect Charter's ongoing efforts to navigate various challenges while pursuing growth opportunities.
InvestingPro Insights
As Charter Communications, Inc. (NASDAQ: CHTR) fortifies its position in the media landscape through strategic partnerships, such as its recent deal with Warner Bros. Discovery Inc., it's important to consider the company's financial health and market performance. Charter has been demonstrating proactive management with aggressive share buybacks, which can be a sign of confidence in the company's future performance. Additionally, the company has garnered positive attention from analysts, with 9 analysts revising their earnings upwards for the upcoming period, suggesting potential for growth.
InvestingPro Data shows Charter's market capitalization stands at a robust $52.34 billion, with a Price to Earnings (P/E) ratio of 10.27, which adjusts slightly to 10.01 when looking at the last twelve months as of Q2 2024. The company's PEG ratio during the same period is 1.91, indicating the relationship between its price/earnings ratio and earnings growth rate. With a revenue growth of 0.23% over the last twelve months as of Q2 2024, Charter is maintaining a steady pace in its financial performance.
One of the InvestingPro Tips highlights that Charter is a prominent player in the Media industry, which aligns with its recent business moves, including the agreement with Warner Bros. Discovery. However, it's worth noting that Charter does not pay a dividend to shareholders, which might influence investment decisions based on individual preferences for income-generating stocks.
For those interested in a deeper dive into Charter's market performance and financial health, InvestingPro offers comprehensive analysis and additional tips. There are currently 9 more InvestingPro Tips available for Charter Communications, which can be accessed to gain further insights into the company's outlook and investment potential.
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