The Zacks Analyst Blog Highlights: DIRECTV, News Corp., Walt Disney, Comcast and DuPont

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Jun 04, 2013, 09:30 ET

CHICAGO, June 4, 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 DIRECTV (Nasdaq:DTV), News Corp. (Nasdaq:NWSA), Walt Disney Co. (NYSE:DIS), Comcast Corp. (Nasdaq:CMCSA) and DuPont's (NYSE:DD).

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Here are highlights from Monday's Analyst Blog:

DIRECTV Opting for Hulu

Growing saturation in the U.S. pay-TV market and increased competition from the low-cost online video streaming service providers are forcing established pay-TV operators to restructure their business models. A recent Reuter report stated that DIRECTV (Nasdaq:DTV), the largest satellite-TV operator in the U.S., has offered $1 billion to acquire Hulu, the online video streaming service provider.

Hulu is currently jointly owned by News Corp. (Nasdaq:NWSA), Walt Disney Co. (NYSE:DIS) and Comcast Corp. (Nasdaq:CMCSA). However, Comcast has no management control over Hulu as it had been restricted by the FCC after its acquisition of NBC Universal. Reuter reported that seven firms have bid for Hulu. Apart from DIRECTV, two other firms have also offered $1 billion.

The U.S. pay-TV market is extremely competitive. In addition to the traditional Cable TV and satellite TV operators, telecom giants are also offering fiber-based high-speed video services. In contrast, low-cost online video streaming services have also become very popular especially when the economy is still reeling under fluctuations.

In order to survive in this juncture, traditional pay-TV operators are diversifying in related fields. Comcast acquired content developer NBC Universal and deployed several innovative services such as X1, Streampix, and high-speed business services. Time Warner Cable is concentrating on high-speed residential and business services. DISH Network is desperately trying to deploy a nationwide wireless network.

Similarly, we believe that DIRECTV also needs to restructure its business model and the decision to bid for Hulu is one such step. Hulu commands over 4 million subscribers and generates revenues of about $700 million per annum through subscriptions and a free ad-supported service. Hulu will enable DIRECTV to offer low-cost online video in addition to the company's expensive premium-brand pay-TV package.

In the U.S., DIRECTV had 20.105 million subscribers at the end of the first quarter of 2013. Although the company is still generating net new subscribers, the rate of growth has slowed down. In the last quarter, it added just 21,000 subscribers compared with 81,000 subscribers in the year-ago quarter.

DIRECTV also has a solid footing in the Latin American markets. However, even there, competitive pressure is gradually increasing due to high-speed 3G bundled services of voice, video and data offered by the large telecom operators.

DuPont CEO Outlines Priorities

DuPont's (NYSE:DD) CEO and Chair announced, at the Strategic Decisions Conference that its "Integrated Science" strives to deliver value to customers and shareholders and provides it an advantage like no other companies.

Agricultural sciences, biosciences and material sciences, these are the three scientific strength areas of DuPont that are well integrated across the company. These segments provide unique solutions to customers' problems and create value for the shareholders. The CEO emphasized that DuPont has worked for improving fuel efficiency, creating advanced biofuels, improving food quality and growing applications of renewably sourced polymers.

DuPont's CEO further pointed out its strategic priorities for delivering greater shareholder returns. DuPont remains committed to extending its leadership in the science-driven segments of the agriculture-to-food value chains and leverages the linkages across these segments. It also focuses on offering unique and, high-value advanced materials through science-based solutions and create transformational, new bio-based businesses like biofuels and biomaterials.

Over the past five years, DuPont has increased its research and development by about 50%. The company also allocates more cash to those businesses which give higher returns. Thus DuPont's strategy of allocating resources speeds up science-driven innovations for customers and increases the value for its shareholders.

DuPont is a global chemical and life sciences company and provides innovative products, materials, and services to the global market. The company beat expectations in first-quarter 2013 on the strength of its agriculture business, reflected by strong corn seeds and crop protection products sales.

DuPont currently retains a Zacks Rank #3 (Hold).

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