As companies in many parts of the media sector struggle, cable operators have been one of the few bright spots for investors recently. With two large cable operators -- Comcast (NYSE:CMCSA) and Time Warner Cable (NYSE:TWC) -- reporting earnings this week and next, let's look at the industry's strengths, challenges, and its ability to reward shareholders.

Most investors are familiar with triple-play packages offered by cable companies. This combination of digital video, high-speed Internet, and telephone service has been attracting new subscribers to cable in droves lately. For example, when Comcast introduced the bundled services, it went from 2.6 million revenue-generating units (RGUs) -- one household taking one service -- in 2005 to 6.5 RGUs the following year.

Topping DSL
The bundled cable services create favorable operating conditions for public cable companies such as Comcast, Charter Communications (NASDAQ:CHTR), Mediacom, and Cablevision. Since the triple bundles offer three separate services, each area comes with competitors that don't want cable companies cutting into their dinner.

Telephone companies that offer digital subscriber line (DSL) services have been considered a threat to high-speed Internet. But DSL has its shortcomings, and in my mind, that contest has tilted decidedly in cable's direction. Satellite television providers such as DirecTV (NYSE:DTV) and EchoStar (NASDAQ:DISH) should have given cable companies a run for their money, and for a while, they did. But the satellite companies can't replicate cable's triple play or its potentially robust video-on-demand feature, so they've been slipping behind their cable brethren of late. Chalk up a major win there for cable.

That brings us to the triple-play packages now being offered by telephone companies Verizon (NYSE:VZ) and AT&T (NYSE:T). These telecoms are offering their packages in an increasing list of locations, but cable currently has a healthy lead in on-demand content. Comcast, for instance, now offers roughly 9,000 monthly on-demand programs to its subscribers, with a new focus on offering local on-demand programming. That's a third win -- or at least a strong lead -- for cable. But don't assume that telecom companies can't level the playing field over time.  

Cable operators' next strong move will likely involve interactivity, a shift observers have expected for years. With the triple play's success seemingly assured, it appears that the companies are ready to add new opportunities for their subscribers. Interactivity would be the most logical addition, in part because it would further distance cable from its satellite competition, which lacks an interactive platform.

Beyond competition, there are potential challenges lurking around the corner for cable companies. Set-top box costs, which can amount to several hundred dollars per copy, have pushed most of the companies' capital spending budgets higher as of late. And an FCC push to allow consumers to buy their own boxes has unleashed a minor tempest that could result in multiple system operators (MSOs) passing set-top box rental costs on to their subscribers, to the tune of $2 or $3 per month. That may not sound like much, but if cable has an Achilles' heel, it's price. Anything that drives its prices higher could also drive customers into the arms of the competition.

Cable companies may also have to square off with another opponent -- broadcast companies. Compensation is being requested-- and, in come cases, demanded -- by broadcast companies for the retransmission of their programming. It's far too early to judge how this long-awaited change will affect the cable companies, so I'm not yet ready to call it a loss for their side.

Looking good
While the MSOs seem to have an advantage, it would be silly for them to rest solely on their recent laurels. While they may hold many consumers' hearts and dollars today, that only gives them more to lose. But I have faith that the small group of remaining cable companies will continue to constitute the best place in the media sector for hard-earned Foolish investment funds.

That said, which cable companies most deserve your financial attention? For now, I'd recommend that you stick with the two largest players in the group, Comcast and Time Warner Cable.

In management -- which I think is more important than even the most astute analysts typically recognize -- both companies are well stocked. Comcast CEO Brian Roberts, the son of a company's founder, heads an executive team that is uniformly strong, and at Time Warner Cable, "job hopper" CEO Glenn Britt joined his current organization immediately upon receiving his MBA degree 35 years ago.

Both companies are also effective operators, and Comcast has the added plus of owning several networks, including the extremely successful Golf Channel. Similarly, Time Warner Cable benefits from its affiliation with Warner Bros.' strong film and programming units (such as the small, unheard-of movie phenomenon Harry Potter).

There you have it, then, Fools: a couple of strong companies in easily the sturdiest part of the media sector. I'd suggest that you watch their coming earnings releases carefully. You just might find something you like.

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Fool contributor David Lee Smith, an avid consumer of sports and news programming, does not own shares in any of the companies mentioned. He welcomes your questions or comments. The Motley Fool has a disclosure policy.