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Time Warner Inc. (TWX) Stock Ready for the Future of Media

The arms race for media content is on, and one of the biggest players to watch going forward is Time Warner Inc. (NYSE:TWX) . The company’s assets to compete in a changing media world include Warner Bros. Entertainment, Time, TNT, TBS, CNN, and the crown jewel, HBO.

Time Warner Inc (NYSE:TWX)

As streaming becomes more accessible and companies build new business models to exploit this market, it will be key for content owners to be on their toes. Here’s why Time Warner Inc. (NYSE:TWX) is well prepared for the shift.

Ready for cord-cutting
The potential for cord-cutting has been around for years but it’s only now becoming realistically feasible. Netflix, Inc. (NASDAQ:NFLX),, Inc. (NASDAQ:AMZN) Prime, and Hulu are often seen as the options for those looking to cut cable and ways for investors to get exposure. But I think Time Warner stock is a better option. Time Warner Inc. (NYSE:TWX)’s HBO Go has quietly built a powerhouse in streaming, proving that media companies can build the infrastructure to handle streaming.

This is key going forward because Netflix and, Inc. (NASDAQ:AMZN) are in a battle against each other for content but they also need to be aware of content owners themselves. If terms from Netflix, Inc. (NASDAQ:NFLX) or Amazon aren’t acceptable to content owners, they can just go it alone and build streaming apps themselves. HBO is the first major channel to prove this ability on a large scale, and that gives Time Warner leverage in the future.

If you want to see who has leverage after the cord is cut, just look at the income of Time Warner Inc. (NYSE:TWX), Netflix, and, Inc. (NASDAQ:AMZN). Content wins, hands down.

TWX Net Income TTM data by YCharts.

Cutting both ways
Of course, there’s another side to cord-cutting for Time Warner. Every HBO subscriber also pays for TNT, TBS, CNN, Cartoon Network, and any other channels included in basic programming. So, HBO’s draw is a double profit center for Time Warner Inc. (NYSE:TWX).

Time Warner has the ability to profit when cord-cutting comes but also the content to continue to profit until it does.

A win-win for Time Warner
Whether consumers are cutting cable now or years into the future, Time Warner Inc. (NYSE:TWX) is ready. The old model of getting media content through cable has provided solid profits for investors, and there are few media companies more prepared for cable-cutting than Time Warner. It hasn’t gone al la carte yet, but it’s only a matter of time, and HBO will lead the way.

The article Time Warner Stock Ready for the Future of Media originally appeared on

Fool contributor Travis Hoium is short shares of The Motley Fool recommends and Netflix. The Motley Fool owns shares of, Inc. (NASDAQ:AMZN) and Netflix, Inc. (NASDAQ:NFLX).

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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