The Zacks Analyst Blog Highlights: Time Warner Cable, DirecTV, AT&T, Dish
Network and Dominion Resources
CHICAGO, Jan. 31, 2013
CHICAGO, Jan. 31, 2013 /PRNewswire/ --Zacks.com announces the list of stocks
featured in the Analyst Blog. Every day the Zacks Equity Research analysts
discuss the latest news and events impacting stocks and the financial markets.
Stocks recently featured in the blog include Time Warner Cable Inc.
(NYSE:TWC), DirecTV (Nasdaq:DTV), AT&T Inc. (NYSE:T), Dish Network Corp.
(Nasdaq:DISH) and Dominion Resources Inc. (NYSE:D).
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Here are highlights from Wednesday's Analyst Blog:
TWC to Hike Rates on Multiple Deals
Time Warner Cable Inc. (NYSE:TWC) – the second largest cable MSO in the U.S. –
plans to increase rates on the back of multiple deals signed with different
sporting majors like Los Angeles Galaxy, Los Angeles Sparks, Los Angeles
Lakers and Los Angeles Dodgers.
The demand for sports network is always on the rise. In order to tap the
growing demand mainly across Los Angeles and Hawaii regions, Time Warner Cable
launched two specialized sports networks namely Time Warner Cable SportsNet
and Time Warner Cable Deportes in October last year.
In an effort to popularize these channels, Time Warner Cable is continuously
expanding its local sports coverage by signing long standing telecast
agreements with Los Angeles-based popular teams in different categories.
The recently signed 25-year contract with the popular baseball team Los
Angeles Dodgers is expected to cost Time Warner Cable more than $7 billion.
Moreover, the company has already spent around $3 billion on its 20-year
agreement with the basketball team Los Angeles Lakers.
These hefty fees of more than $450 million per annum will increase the
programming costs for Time Warner Cable. So, to offset the rise in costs, the
company started charging an extra $2.25 per month from those subscribers, who
have taken the two Lakers channels. However, these channels are free for those
who opt bundle package services. Moreover, the company will also hike rates on
basic programming packages in Los Angeles by 8.2% to $72.50 and its DVR rental
fee by 18.6% to$12.99 per month.
Furthermore, Time Warner Cable will also gain from the distribution rights
sold to other pay-TV majors like DirecTV (Nasdaq:DTV), AT&T Inc.'s (NYSE:T)
U-Verse and Verizon's FiOS TV.
The trend to pass over the fees to its respective customers is gaining
popularity across pay-TV industry as both Dish Network Corp. (Nasdaq:DISH) and
DirecTV have recently hiked its programming rates. So, in the near future, the
subscribers tend to be the ultimate losers if these higher rates are not
absorbed by these pay-TV companies, thereby forcing these subscribers to move
towards low cost video streaming companies.
Currently, Time Warner Cable has a Zacks Rank #3 (Hold).
Earnings Preview: Dominion Resources
Dominion Resources Inc. (NYSE:D) is slated to release its fourth quarter 2012
financial results before the market bell on Jan 31, 2013. In the last quarter,
the power generation, distribution and transmission company posted a negative
surprise of 5.15%. Let's see how things are shaping up at Dominion prior to
Factors to Consider This Quarter
The expectation of normal winter will definitely benefit Dominion and the
successful outcome of the Virginia Fuel rate case will also boost the top
line. The growth projects which were completed at Dominion Energy are likely
to add to revenue.
However, we need to watch out for lower merchant generation margins and a
higher tax rate. The regular operations during the quarter were disrupted by
Hurricane Sandy, which will definitely have an impact on the quarterly
Our proven model does not conclusively show that Dominion Resource is likely
to beat earnings this quarter. That is because a stock needs to have both a
positive earnings Expected Surprise Prediction (ESP) (Read: Zacks Earnings
ESP: A Better Method) and a Zacks Rank of #1, 2 or 3 for this to happen. This
is not the case here.
Negative Zacks ESP: This is because the Most Accurate estimate stands at 62
cents while the Zacks Consensus Estimate is higher at 67 cents, resulting in
Zacks Rank #3 (Hold):
Dominion's Zacks Rank #3 when combined with negative ESP makes surprise
prediction difficult. We caution investors against the stock going into the
earnings announcement, as a negative Zacks ESP lowers the possibility of an
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