By Aishwarya Venugopal
REUTERS - Shares in Walt Disney Co were the biggest gainers on the Dow Jones Industrial Average on Monday after the company reached a tentative deal with cable operator Altice USA that prevented a Disney network programming blackout.
Altice USA and Disney have been at loggerheads over how much the fourth-largest U.S. cable operator would pay to continue carrying ESPN, ABC and other channels on its Optimum cable service.
The deal announced on Sunday allows Altice's Optimum cable service to head off the risk of a blackout that would put at risk some of its 3.1 million subscribers in New Jersey, New York, Connecticut and Pennsylvania.
Analysts said signs that Disney had upped fees for ESPN, and come to a deal at all, bode well for a series of negotiations with other cable providers in the months ahead.
"(The deal) has to be interpreted as a very bullish sign for Disney," Moffett Nathanson analyst Michael Nathanson wrote in a note. "The Altice renewal is the first deal in the next cycle of ABC/ESPN affiliate agreements and should serve as a template for the next wave of deals."
Sources familiar with the talks told Reuters on Sunday that Disney had secured fee increases for ESPN, local affiliate WABC and other major networks.
Disputes between cable companies and media groups over the cost of carrying channels are common, but the dispute marks the first time a cable company has pushed back at increased fees for ESPN, the most popular sports network.
ESPN, has been losing subscribers and seeing its ratings fall. That has cut revenue from cable operators, which pay monthly fees for each subscriber, giving them ammunition in talks with Disney.
"Given the upcoming cycle of renewals, investors should now be more confident that FY 2017 will mark the low point of affiliate growth," Nathanson wrote.
Shares of Altice were up 2.2 percent at $27.90 in early trading, easing from a jump of more than 10 percent premarket. Disney's shares rose 1.5 percent to $99.70.
(Reporting by Aishwarya Venugopal in Bengaluru in Bengaluru; Editing by Savio D'Souza and Patrick Graham)
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
