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September 6, 2010
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Time Warner Cable Inc (TWC) entered into a new expanded programming deal with Walt Disney Co (DIS) to provide programs from ABC Family, Disney Channel, Disney XD, ESPN, ESPN2, ESPNEWS, ESPNU, ESPN Classic, ESPN Deportes and SOAPnet, as well as a handful of Disney-owned ABC affiliates, including WTVD in Durham .
Time Warner Cable ended its prolonged dispute with Walt Disney that threatened to deter millions of viewers from watching some of their favorite TV shows and channels. Subscribers will have digital access to online content and expanded Video On Demand services.
As per the deal, Time Warner video subscribers and Bright House Networks video subscribers will get access to ESPN3.com without any extra charge. ESPN3.com is a sports channel, which offers full game videos and recently it broadcast live World Cup matches that built huge audiences via computer screens in the workplace.
Time Warner Cable will also be rolling out two sports highlights channels called ESPN Goal Line - that gives fans a live peek at games around the nation on Saturdays, and ESPN Buzzer Beater - will be cover the college basketball season in January.
Disney won cash payment for granting Time Warner Cable the right to retransmit signals from four ABC stations and also secured a new 24-hour channel called Disney Junior, a `rebranding of its SOAPnet channel, when it launches in 2012.
Time Warner Cable faces stiff competition from online video services such as Netflix Inc's (NFLX) streaming service and Amazon.com Inc (AMZN). Apple Inc.’s (AAPL) recently launched 99 cent TV service also poses threat to Time Warner Cable.
Time Warner Cable is also facing severe competition from both telecom and satellite service providers that started offering subscription TV services. On the other side, we also remain optimistic regarding the company’s diversification, network upgrade and innovative product offering strategies.
We maintain our long-term Neutral recommendation for Time Warner Cable. Currently, it is a short-term Zacks #3 Rank (Hold) stock.
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