Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

A Dimmer Future for Cable Operators

By April Taylor - Updated Apr 6, 2017 at 1:48PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Will young consumers cancel cable?

The future doesn't look too bright for cable. Since the start of the year, two significant skirmishes between cable operators and content owners have angered customers and drawn media derision. First, News Corp (Nasdaq: NWS) threatened to block Time Warner Cable's (NYSE: TWC) transmission of its Fox station, with a detente occurring just ahead of a weekend filled with the top-tier college bowl games.

More recently, Disney (NYSE: DIS) and Cablevision (NYSE: CVC) engaged in a similar fight, leading to ABC's removal from Cablevision's lineup early Sunday morning. The station was flipped back on shortly after ABC's Academy Awards broadcast began later that same night.

While the companies involved did not reveal the details of how they settled the disputes -- or came to a temporary cease-fire, at least -- it appears that the cable companies gave up some ground, or some dollars, to the content owners in both cases.

With an ever-increasing expansion of distribution channels -- Netflix (Nasdaq: NFLX), Apple's (NYSE: AAPL) iTunes store, and Hulu online, in addition to the FIOS offerings of traditional telecom competitors such as Verizon (NYSE: VZ), cable companies have seen their power over content distribution wane.

At the same time, consumers are increasingly turning to online venues for television content, making a pricey premium cable TV bundle less of a necessity. A recent study by Conference Board / TNS Compete reported that 25% of all U.S. households watched some TV online.  Younger consumers aged 18-24 are watching more than five hours of video per month online, according to Nielsen. Neither of these trends is positive for cable operators.

Look for cable-operator-vs.-content-owner disputes to become more common, especially on the eve of major televised events best watched live. That said, don't look for NBC to be party to one of these spats, given its pending sale to Comcast.

If you had to invest in one cable company or one content provider, which company would it be? Leave your thoughts in the comments box below!

More Foolish content choices:

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Netflix, Inc. Stock Quote
Netflix, Inc.
NFLX
$602.13 (-2.33%) $-14.34
The Walt Disney Company Stock Quote
The Walt Disney Company
DIS
$146.22 (-0.67%) $0.98
Verizon Communications Inc. Stock Quote
Verizon Communications Inc.
VZ
$51.42 (1.36%) $0.69
Twenty-First Century Fox, Inc. Stock Quote
Twenty-First Century Fox, Inc.
FOX

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
624%
 
S&P 500 Returns
141%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 12/04/2021.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Our Most Popular Articles

Premium Investing Services

Invest better with the Motley Fool. Get stock recommendations, portfolio guidance, and more from the Motley Fool's premium services.