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Cable and Media Stocks to Report Earnings: CMCSA, TWC, VIAB

In the middle of the first-quarter earnings season, market consensus of negative earnings growth still persists, albeit in a less pessimistic manner than was initially perceived. With the quarter witnessing the highest number of downward revisions in the recent past, the Zacks Trend report predicts a 9.7% year-over-year drop in earnings of S&P 500 companies.

While our data indicates the fourth consecutive quarter of an earnings decline, we focus on some cable and media conglomerates that are expected to report their quarterly results this week.

Industry Trends

The broadcast TV industry is currently going through a transition. Even as the pay-TV business model continues to hold a major share of the market, it is facing stiff competition from the latest over-the-top (OTT) online video streaming service offerings. Apparently, massive growth of high-speed wireless networks and devices like smartphones and tablets has altered the taste of the millennial population to a great extent.

There are many Cable behemoths who own media companies. While the recent development in the pay-TV industry enabled such companies to generate revenues by selling original contents to OTT video streaming service providers, it has cannibalized their original source of revenues – subscription fees and advertisement fees – due to widespread cord-cutting. However, recently, many such cable companies have been jumping on the video streaming bandwagon in order to stay competitive. Additionally, pay-TV operators are now ‘skinning’ their packages to counter cord-cutting. For media companies, escalation in production and programming costs for original content remains a concern, going forward.

Earnings in Focus

Here are three companies scheduled to announce Q1 earnings this week.

Comcast Corporation CMCSA, a leading cable MSO (multi-service operator) in the U.S., is scheduled to release first-quarter 2016 results on Apr 27, before the market opens. In spite of facing cord-cutting pressures in the pay-TV segment, Comcast can maximize its growth prospects on the back of its enterprise business division and its newly formed ad targeting division – ‘Audience Studio’.

Comcast has a Zacks Rank#3 (Hold) and a positive Earnings ESP of 1.27%. Initially, our model did not predict better-than-expected earnings for Comcast, but the current combination of its Zacks Rank #3 (Hold) and positive ESP indicate a beat in the to-be-reported quarter. Last quarter, Comcast had delivered a negative earnings surprise of 1.27%. (Read More: What's in Store for Comcast This Earnings Season?)

Time Warner Cable Inc. TWC is slated to release its first-quarter 2016 results on Apr 28, before the market opens. Time Warner Cable has been persistently losing video customers in spite of its implementation of several business-oriented strategies. Furthermore, a soft TV advertising environment might dampen Time Warner Cable’s top-line growth. Moreover, since the company is heavily investing in promotional pricing as well as in services like IPTV, it might experience temporary margin contraction in the near term.

Time Warner Cable has a Zacks Rank#4 (Sell) and an Earnings ESP of +1.16%, indicating that the company is not likely to beat the Zacks Consensus Estimate this quarter. In the last reported quarter, however, the company’s earnings had surpassed the Zacks Consensus Estimate by 0.56%. (Read More: Time Warner Cable: What Lies Ahead in Q1 Earnings?)

Viacom Inc.VIAB is set to release second-quarter fiscal 2016 results on Apr 28, before the opening bell. Lack of popular movie releases is likely to hurt the company’s Film segment. In addition, expanded geographic presence will increase foreign currency exchange risks for Viacom.

Viacom carries a Zacks Rank #4 (Sell) and a negative Earnings ESP of 10.00%, indicating that the company is not likely to beat the Zacks Consensus Estimate this quarter.. In the last quarter, however, the company had posted a 0.85% earnings surprise. (Read More: Viacom Q2 Earnings May Disappoint: Will Stock Suffer?)

Stay tuned! Check later on our full write-up on earnings releases of these stocks.

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COMCAST CORP A (CMCSA): Free Stock Analysis Report
TIME WARNER CAB (TWC): Free Stock Analysis Report
VIACOM INC-B (VIAB): Free Stock Analysis Report
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