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Pacific Crest: Apple Will Launch A Virtual MVPD Service This Year

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In a report published Tuesday, Pacific Crest analysts maintained a Sector-Weight rating on Apple Inc. (NASDAQ: AAPL), saying that the company is likely to launch a "disruptive virtual MVPD service" later this year.

In the report Pacific Crest noted, "Industry participants, news reports and commentary from network executives suggest Apple is likely to launch a virtual MVPD service later this year. We expect the service to be a medium sized bundle of traditional linear networks with significant stacking rights and a heavy emphasis on on-demand viewing, likely with a base price around $40 or $50 per month."

The analysts believe that this service would be much more disruptive than a "skinny bundle." The landscape of pay TV could change; provided Apple is able to execute well. "The Internet can support better personalization, hardware flexibility and customer service than traditional MVPDs, as well as faster product improvement."

"Networks should be primary beneficiaries," the analysts wrote, while explaining that the largest networks would be in a position to negotiate affiliate fees that "exceed their current averages."

While Time Warner Inc (NYSE: TWX) appears to be the best positioned to benefit, CBS Corporation (NYSE: CBS), Twenty-First Century Fox Inc (NASDAQ: FOXA), Walt Disney Co (NYSE: DIS) and AMC Networks Inc (NASDAQ: AMCX) are also poised to be among the main beneficiaries.

While the service would be positive for Apple, near-term profits "would likely be limited," the report stated.

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May 2018BMO CapitalMaintainsMarket PerformMarket Perform
May 2018Canaccord GenuityMaintainsBuyBuy
May 2018BarclaysMaintainsEqual-WeightEqual-Weight

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