IAC/InterActiveCorp (IACI): A Disruptive Technology Buying Opportunity

The haters

The Walt Disney Company (NYSE:DIS), which owns ABC, is one company that is backing the lawsuits. Not only does Disney want to protect its ABC content from being redistributed without payment, but it also wants to ensure that people have a reason to keep paying for its sports powerhouse ESPN, another prized property. Aereo is a serious threat to The Walt Disney Company (NYSE:DIS)’s massive broadcast business. Comcast Corporation (NASDAQ:CMCSA) which is both a cable company and the owner of NBC is another company facing a double whammy from Aereo if customers cut the cord.

The live TV angle has been the knock against Netflix, Inc. (NASDAQ:NFLX) from day one. It is the most likely reason why subscribers to cable haven’t defected to the much cheaper alternative. They have, instead, paid for both. However, the prospect of pairing Netflix with a viable cable alternative to save money is very enticing.

Interestingly, pairing the privately held Hulu and Netflix services resolved some of the “live” issue, but not all of it. Hulu is owned by the networks and is run in a way that compliments their businesses. The combination, however, still lacks live sports and news.

Aereo goes that extra mile, giving customers access to live news, live television shows, and any sports available over broadcast TV. That is a very compelling combination that could entice cable customers to defect if paired with Netflix.

Disruptive

Since IAC/InterActiveCorp (NASDAQ:IACI) is publicly and financially backing Aereo, it could see its share price move sharply on the legal issues surrounding Aereo. IAC, however, is a much larger company with fairly bright prospects. Investors should monitor the Aereo connection for a potential sell off that could lead to a buying opportunity.

In addition, it is worth keeping an eye on Netflix, too, since it could see even more subscribers if Aereo gets the legal green light.

The article A Disruptive Technology Buying Opportunity originally appeared on Fool.com and is written by Reuben Gregg Brewer.

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