Many feared that cable TV and cable stocks were in trouble as satellite providers and telecom providers encroached on their territory. The cable industry faced these challenges by offering bundled services – cable TV, broadband internet, and telephone service all in one bill. Cable TV providers also have done a great job of securing their home markets and have not engaged in competitive price wars. The result has been a few dominant providers that customers rely on for their cable, internet, and telephone service in key markets.
Not just a play on cable
Comcast Corporation (NASDAQ:CMCSA) is the top pay TV operator in the world with over 22 million subscribers. The company is also the top broadband provider in North America with 19.4 million subscribers. Comcast Corporation (NASDAQ:CMCSA) also has a strong presence in the telephone segment with over 10 million subscribers.
One strong area for growth for Comcast Corporation (NASDAQ:CMCSA) is in business services. Whereas some residential homeowners are opting to cut the cord and go wireless, businesses do not have that luxury. They still require reliable broadband and telephone services. Comcast Corporation (NASDAQ:CMCSA) Business Services has attracted businesses that require large amounts of bandwidth. Comcast Corporation (NASDAQ:CMCSA)’s fiber-optic network is one of the most advanced in the nation.
Comcast Corporation (NASDAQ:CMCSA) has done a great job in diversifying its assets to include content as well. Comcast is now the full owner of NBC and Universal Pictures. The company also owns the Universal Theme Parks. In the digital realm, Comcast owns 32% of Hulu, which is currently for sale. No matter what happens with the Hulu sale, Comcast is a winner. It received its share in Hulu when it completed the acquisition of NBC Universal.
Comcast will see a boost in revenue and profit from Universal Pictures’ new movie “Fast & Furious 6.” The movie had the second-biggest opening weekend of the year. The company will use some of those profits to fund its $2 billion share buyback for this year.
Cable TV in the key markets
Time Warner Cable Inc (NYSE:TWC) is a pure-play on cable TV. Its assets are in the prime U.S. markets of New York, southern California, Texas, Florida as well as other key demographic areas. At the end of last year, Time Warner Cable Inc (NYSE:TWC) had approximately 15.2 million cable subscribers. The company, like Comcast, also offers broadband and telephone service to go with its cable services.
Time Warner Cable Inc (NYSE:TWC) was late in its transition to a digital platform from analog, but the company is rapidly catching up. The cable operator has been promoting its video on-demand service and just signed a deal with Starz (NASDAQ:STRZA) to expand the Starz (NASDAQ:STRZA) library on Time Warner Cable Inc (NYSE:TWC).
Where Time Warner Cable Inc (NYSE:TWC) has been the most aggressive is in securing rights to sports teams. In the key Los Angeles market, Time Warner Cable Inc (NYSE:TWC) Sportsnet broadcasts the Lakers’ games. Sportsnet also just signed a blockbuster deal to broadcast the Los Angeles Dodgers’ games. Time Warner Cable knows that by providing sporting events, it secures its subscriber base.
John Malone’s return to cable
No one person has had more of an impact on the cable TV industry than John Malone. In the 1990s, he was branded “Darth Vader” by Al Gore. He built America’s largest cable company, TCI, and sold it to AT&T. Malone’s Liberty Media Corp (NASDAQ:LMCA) now owns 27.3% of Charter Communications, Inc. (NASDAQ:CHTR). Liberty Media Corp (NASDAQ:LMCA)’s stock purchase agreement gives it the right to raise its stake to 40%.
Charter Communications, Inc. (NASDAQ:CHTR) is a compelling play on what will John Malone do next. He was a cable titan for most of his career and will he seek to do that again with Charter Communications, Inc. (NASDAQ:CHTR) is what investors are wondering. Liberty Media Corp (NASDAQ:LMCA) CEO Greg Maffei says that the cable industry could be in for another round of consolidation. Whether Charter Communications, Inc. (NASDAQ:CHTR) becomes a consolidator or a consolidatee remains to be seen.