Alphabet Inc GOOG GOOGL’s YouTube TV has been long-expected — so much so that Tuesday’s announcement of its impending release had no effect on BMO Capital Markets’ company thesis.
Analyst Daniel Salmon wrote in a BMO note that the firm has few financial details about the product but predicts affiliate fees of about $33 to $34 per month. Consequently, Salmon expects advertising to drive profits, along with announced inventory sales and innovations.
What Is YouTube TV?
The product will be launched in the U.S. in the next few months, and users can purchase a six-account subscription for $35 per month, with Showtime and Fox Soccer available for additional fees.
“We view the product as distinctly YouTube [...] while also marrying nicely with the live-linear-affiliate model of Pay TV,” Salmon wrote.
Each account will be connected to an unlimited Cloud DVR, and three will be able to stream at once.
Related Link: Youtube Video Views Reach 1 Billion Hours A Day; How Does Television Compare?
The app will feature more than 40 live networks including 10 sports channels and the various offerings of Walt Disney Co DIS, Twenty-First Century Fox Inc FOXA, Comcast Corporation CMCSA and CBS Corporation CBS.
“Clearly, the focus was on as much sports as possible, and anchoring the single-tier product with the broadcast networks," Salmon wrote. "Our view on the space has long been underpinned by positive views on broadcast and sports.”
He noted that Time Warner Inc TWX’s TNT, TBS and related sports packages are “the most glaring omission[s].”
BMO maintains an Outperform rating on Alphabet with a $1,005 price target. The stock was trading around $856 at time of publication.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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