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Cable TV Stocks Approach Their Apple Moment

By Tim Beyers - Sep 16, 2013 at 7:20PM

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A small shift in pricing could signal a huge change for the entire industry.

Now that Breaking Bad is a hit, advertisers are paying network rates for the right to air ads in the final episodes. The shift suggests that once-underdog channel operators such as AMC Networks (AMCX 3.73%) are becoming TV's new power players, says Fool contributor Tim Beyers in the following video.

Call it an Apple moment for cable TV stocks, in which one-time laggards rise to become leaders. We've known this was coming for a while.

Earlier this year, Morgan Stanley published a report that showed broadcast TV ratings have declined 50% over the past decade. No wonder ad rates are normalizing. Audiences are going outside the Big Three networks to get their fill of quality programming.

AMC benefits more from the shift than peers, Tim says, by acting more like Showtime and HBO while still catering to advertisers looking for edgier fare. The network derives roughly 42% of revenue from advertising as of this writing.

Comcast (CMCSA 0.94%) also benefits from the shift via NBCUniversal's interests in Syfy and USA Network. Both advertising-supported channels have found niche hits in the likes of Defiance and Suits, among others. Is now the time to be betting on either of these cable TV stocks? Both? Tim answers these questions in the video, so please watch.

Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team and the Motley Fool Supernova Odyssey I mission. He owned shares of Apple at the time of publication. Check out Tim's Web home and portfolio holdings, or connect with him on Google+Tumblr, or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.

The Motley Fool recommends AMC Networks and Apple and owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Comcast Corporation Stock Quote
Comcast Corporation
$38.63 (0.94%) $0.36
AMC Networks Inc. Stock Quote
AMC Networks Inc.
$30.01 (3.73%) $1.08

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