Ericsson (ERIC) Inks Multi-Year Deal With 20th Century Fox

Telefonaktiebolaget LM Ericsson (ST:ERICAs) (publ) (NASDAQ:ERIC) took a significant step in expanding its subscription video on demand (“VOD”) service — Nuvu — as it signed a deal with leading international content distributor, 20th Century Fox Television Distribution.

Ericsson’s Nuvu is an end-to-end subscription VOD service, spanning both the technology platform and the content licensing, developed for mobile operators in emerging markets. Nuvu leverages on the company’s extensive capabilities based on Ericsson Managed Player and components of Ericsson MediaFirst TV Platform.

Nuvu is collaborating with some of Africa's leading mobile phone operators to deliver a unique content and technology solution to cater to the demands of consumers across sub-Saharan Africa. The partnership with 20th Century Fox will enable Nuvu to offer subscribers some of Hollywood's finest films as part of their package.

The exclusive, multi-year feature film deal will give Ericsson access to 20th Century Fox-produced titles, as well as a wide selection of global film franchises, intended for territories across sub-Saharan Africa in multiple languages. The output will include titles like Dawn of the Planet of the Apes, The Devil Wears Prada, The Monument Men, The Maze Runner, Rio 2, The Fault in Our Stars and Kingsman: The Secret Service, in addition to film franchises, such as X-Men and Die Hard.

For a monthly subscription fee, consumers will acquire unlimited access to an initial 3,000 local and international premium titles from a range of genres.

Further, the service will have a built-in ability to distribute content to users during off-peak periods, which will serve to lower data costs for both operator and consumer. This feature would tackle a key issue which was hindering VOD uptake in Africa. The platform has been designed to integrate into the operator's customer relationship management and payment systems.

ERICSSON LM ADR Price and Consensus

As a leading global provider of broadcast and media services, Ericsson has worked with world’s most famous broadcasters, platforms and content producers, including BBC, HBO, 20th Century Fox, Liberty Global (NASDAQ:LBTYA), Sky, Bonnier Group, TV5 Monde and France 24. This latest deal would expand its footprint across sub-Saharan Africa.

Of late, Ericsson has been grappling with slumping demand in Russia and Brazil, and accelerating negative industry trends have further compounded its problems. Further, Ericsson is also facing stiff competition from Huawei Technologies Co. and Nokia (HE:NOKIA) Corp. (NYSE:NOK) . To combat such critical industry concerns, Ericsson recently struck a partnership with Cisco Systems Inc. (NASDAQ:CSCO) , to boost its product lineup and sell more complete networks. The company expects that the deal would generate $1 billion or more in annual sales for each company by 2018.

Whether the growth and cost-streamlining efforts of this Zacks Rank #4 (Sell) company will help it beat industry-wide demand blues, remains to be seen.

Stocks to Consider

A better-ranked stock in the same space is Harris Corporation (NYSE:HRS) , carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Harris Corporation is an international company focused on communications equipment for voice, data and video applications. The company has an impressive earnings surprise history for the trailing four quarters, beating estimates all through for an average of 4.2%.

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