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Could Discovery Communications’ Affiliate Fees Rise?

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Discovery’s affiliate fees outlook

Affiliate fees have been a cause of major concern for media companies like Discovery Communications (DISCA) in a universe of pay-TV subscriber losses. However, the company expects that for fiscal 2017, its distribution revenues could grow in the mid-single digits. Discovery Communications’ distribution revenues in the United States (SPY) include affiliate fees and content licensing fees.

However, Discovery Communications’ optimism regarding its growth in distribution revenues is also dependent on its content distribution through digital platforms. The company is focused on monetizing its content through various digital platforms, in addition to the traditional linear television networks.

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Viacom’s affiliate fees

Discovery Communications’ peer Viacom (VIAB) also generates a majority of its revenues through affiliate fees. In a bid to generate more affiliate fees, Viacom has restructured its portfolio of television networks and is focusing on five or six of its core television networks. As a result, Viacom is upbeat about its affiliate fees.

Viacom expects that its affiliate fees in the United States and international territories could improve in fiscal 3Q17 on a quarter-over-quarter basis.

Time Warner (TWX) is also optimistic about its affiliate fees and expects that its Turner business could will see its affiliate fees grow in double digits.

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