This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

DirecTV Tries its Hand at Original Programming

NEW YORK ( Trefis) -- After Netflix (NFLX) it's DirecTV's (DTV) turn to venture into original programming despite being a pure service provider. The company is reportedly coming up with the original program Rouge, and that certainly raises some questions about its strategy in specific, and of the pay-TV providers in general.

It is no news that programming costs are rising and either subscribers or the pay-TV service provider or both have to face the implications. While subscribers are facing increased programming prices, the cable and satellite companies are witnessing shrinking margins.

This is a threat that has been acknowledged by all major pay-TV service providers that have frequently been involved in disputes with content owners resulting in programming blackouts.

Could it be that DirecTV is attempting to take first step on the road where it might become less reliant on big media companies such as News Corp (NWSA) and Time Warner (TWX)?

We feel the company is going to use the original programming to generate additional profits to partially offset the shrinking margins in the industry.

See our complete analysis for DirecTV.





The other reason could be building a USP (unique selling proposition). For a long time DirecTV's NFL Sunday Ticket has acted as its USP and with increasing competition and a more saturated market, the company is looking to strengthen its portfolio of unique propositions.

With cable companies performing better and Dish Network (DISH) reviving itself, DirecTV's smooth run is unlikely to continue. It is necessary to manage these risk via diversification. In Latin America, the risk diversification for DirecTV revolves around diversifying across geographies and launching 4G broadband as an additional viable business.

Our price estimate for DirecTV stands at $54.55, implying a premium of little under 25% to the market price.

Click here to find out how a company's products impact its stock price at Trefis.

Like our charts? Embed them in your own posts using the TrefisWordpress Plugin.

This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
AAPL $130.28 0.00%
FB $81.53 0.00%
GOOG $565.06 0.00%
TSLA $218.42 0.00%
YHOO $44.52 0.00%

Markets

DOW 18,080.14 +21.45 0.12%
S&P 500 2,117.69 +4.76 0.23%
NASDAQ 5,092.0850 +36.0220 0.71%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs