Media Stocks?

Discussion in 'General Trading Discussion' started by Rainman, Aug 26, 2015.

  1. Rainman

    Rainman Senior Investor

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    Media stocks continue falling amid fears that more and more people will ditch cable TV as streaming services continue to gain popularity. While yes, the possibility of numerous people ditching cable TV is low, unless the media companies do what their competitors do, launch some streaming services for cord cutting customers, growth will be close to zero.

    Just curious though. What do you, investors, think? Are media stocks now a risky bet?
     
  2. pwarbi

    pwarbi Senior Investor

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    The fact is that more and more people all over the world ARE starting to get rid of cable TV and switch to other fotms of media. I think if the cable companies had acted quicker, the slump could have been avoided but as it stands, I don't see that changing anytime soon, so I'd be avoiding investing in them aswell
     
  3. Rainman

    Rainman Senior Investor

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    Comcasts response to cord cutting was launching a streaming service which sots subscribers around $15 a month. I don't know how well it will do but at least they'll make some money from it and if they improve it then obviously they'd make more money. Should other media companies decide to wade in then it's the Netflix and others I wouldn't want invest in because they won't be making as much money as they previously did. Or maybe media stocks should be avoided altogether . . .
     
  4. petesede

    petesede Guest

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    The other issue is just advertising. the internet offers more targeted marketing opportunities that are more effective than 30 second slots that target the entire population. I also think worldwide illegal streaming is going to be a problem. it is just too hard to enforce and these companies are spending millions on lawyers to shut down a website that cost $30 to launch. It is like I talk about Bush´s war... you are not winning if you are dropping a $5 million dollar tomahawk missile on a $3 camel hair tent.
     
  5. baudwalk

    baudwalk Senior Investor

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    Cable TV isn't going to disappear. Growth will slow but I frankly think all these gadgets connected to the pipe are too confusing for the the consumer who is not technology savvy. Switching TV inputs is a nuisance (I am not ready to drop a bundle on a smart TVl, menu choices among the various devices and streaming services vary widely, and the electric power strip has a heart attack with yet another added wall wart. I recently added a Roku Stick, and that just adds another remote control to misplace on the coffee table or lose under the couch. The bandwidth just isn't sufficiently steady in large areas of the country. Around here the Comcast internet speed tumbles in prime time as more households turn on their internet-connected devices. The feed cable running down the street hasn't been replaced in 40 years, and requests to do are stonewalled. (Forget satellite, I would have to remove about 15 tall trees to "see" the geosynchronous satellites.)

    Frankly, I believe the solution for Comcast, Time-Warner and other cable TV providers to compete is to unbundle the channel offerings. It seems wonderful to say there are more than 200 channels to pick from, but most offerings are endless repeats of reality and home hunting and renovation shows, ad nauseum, and on. A change to a shopping basket approach -- let the customer choose the channels to be in a household subscription -- would be welcome here.

    Unfortunately the shopping basket won't happen around here. The cable company is a monopoly in many states. In prehistoric times, municipalities were enabled to bid out cable TV service, receiving royalties for the number of connections and ensuring neighborhoods weren't bypassed. Those PUC rules and regulations have not significantly changed in decades. From a business perspective, upgrading the infrastructure now is stupendously expensive.

    In summary, cable TV companies will continue to raise rates as media providers and distributors argue over fees. The unplugging discussion will continue to bubble but the bulk of the households won't change from the traditional connections that first appeared in the Atlantic City area decades ago. The monopoly will continue. Investors will still benefit from dividends, much like those investing in Verizon and AT&T. Not exciting but reasonably safe, IMHO.
     
  6. crimsonghost747

    crimsonghost747 Senior Investor

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    This. Plus online management of your package that allows you to select and deselect channels as you wish, and a simple X dollars per month per channel pricing system.
    Won't be a popular idea as this will certainly affect revenues but it would allow them to effectively compete against streaming services by giving people choice. And it would increase customer database substantially! I'm not going to pick up a package of 200 channels since I never watch TV but I would subscribe to 1-3 good sports channels to see the games I want to see.
     
  7. petesede

    petesede Guest

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    There is going to have to be some major mentality changes for that to happen. They have always been resistant to ´a la carte´ programming and there is a lot of legislative pressure to keep packages. A lot of people, rightly, believe that a ton of educational and other important programming will get lost because people will not pay extra for them.

    There are two other issues I would see. The first would be big events, especially on stuff like HBO. Personally, I would only ´pay´ for HBO for the three months they are airing new Game of throne Episodes.. others might only subscribe for a month if there is a big boxing event... If you are free to not take HBO when they don´t have GoT going on, does that mean they are free to charge higher prices when they are showing GoT new episodes?? Is Fox Sports going to charge me more during football season because most people unsubscribe in the off-season?

    the other issue is customer support. I would guess the average person with a package just pays and pays month after month and rarely has any type of customer support issue... maybe less than 3% of customers per month.. If you have people turning on and turning off services, that number is going to skyrocket.. And my gut feeling is that the increases in costs that are passed onto us because of other people having customer service issues would probably be more than we save by going a la carte.
     
  8. Nox

    Nox Guest

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    All is not lost for all media companies, these companies already have years of experience in the field, a good supply chain and presence in the market. The company that is able to reinvent itself could be poised for great success. Right now, with the stock prices of media companies falling, hypothetically if you're able to identify the company that is most likely to come up with the quickest turnaround solution, this is the company you'd place your money in right now. So I wouldn't completely write off media companies, I'd keep a look out for their next move. Some will rise, some will fall and others could be bought out.
     

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