Altice USA ATUS, through its Optimum brand, recently issued a statement announcing the expiration of its carrier agreement with MSG Networks, resulting in the removal of the latter’s content from its TV service. 

The core issue in the negotiations centered around MSG Networks’ demand for inflated programming fees. Additionally, the company insisted that Optimum make its channels available to the vast majority of subscribers, even those who did not want to access its content. This “all or nothing” strategy would have led to increased monthly cable bills for customers, forcing many to pay for programming they don't watch. 

Optimum proposed several alternative solutions, including absorbing the high fees in exchange for offering MSG Networks’ content in a more flexible manner. This would have allowed fans to continue enjoying the channels they love while non-viewers would not be burdened with paying for content they did not use. However, MSG Networks rejected these offers and was unwilling to negotiate for an amicable solution.

How Does This Decision Affect ATUS?

The conflict between Altice and MSG Networks highlights a larger industry trend, where traditional content providers face increasing competition from the surge of direct-to-consumer streaming platforms. By offering flexible and affordable content packages, Altice is placing strong emphasis on customer satisfaction and has made significant investments to enhance its customer service. 

Customer calls for care and technical support have been reduced due to improvements in troubleshooting tools and self-service capabilities. Its strategy of offering customized content packages signals a move toward more consumer-focused models, potentially improving customer satisfaction and fostering long-term benefits. 

Altice is focused on accelerating its network expansion plans, market penetration, and fiber network upgrades for long-term sustainable growth. It offers a range of broadband speeds for all budgets, from Altice Advantage Internet to multi-gigabit services for enterprise customers. It is on track with its five-year plan to build a fiber-to-the-home (FTTH) network and deploy its home communications hub. The company believes that the FTTH network will be more resilient with reduced maintenance requirements and lower power usage.

These advancements are expected to attract more customers and increase market share. This, in turn, is likely to translate into incremental revenues and boost the stock.

ATUS Stock Price Performance

Shares of Altice have plunged 21.7% over the past year against the industry’s growth of 77.4%.

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ATUS’ Zacks Rank and Stocks to Consider

Altice currently carries a Zacks Rank #3 (Hold).
 
Some better-ranked stocks in the broader industry have been discussed below:

Ubiquiti Inc. UI sports a Zacks Rank #1 (Strong Buy) at present. In the last reported quarter, Ubiquiti delivered an earnings surprise of 20.9%. Its highly flexible global business model remains apt to adapt to the changing market dynamics to overcome challenges while maximizing growth. You can see the complete list of today’s Zacks #1 Rank stocks here.

The company’s effective management of its strong global network of more than 100 distributors and master resellers improved its visibility for future demand and inventory management techniques.
 
InterDigital, Inc. IDCC sports a Zacks Rank of 1 at present. It has a long-term growth expectation of 17.44%.

IDCC pioneered advanced mobile technologies that enable wireless communications and capabilities. The company designs and develops various advanced technology solutions for digital cellular, wireless 3G, 4G and IEEE 802-related products and networks.

Keysight Technologies, Inc. KEYS sports a Zacks Rank of 1 at present. In the last reported quarter, it delivered an earnings surprise of 5.10%. Keysight is expected to benefit from the growing proliferation of electronic content in vehicles, momentum in space and satellite applications and rising adoption of driver-assistance systems globally.

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