Time Warner Cable Inc (TWC) and the End of Broadcast Television

This last year, CBS’ shares have grown faster than I think is justified by its performance. Growth is good, but I have to see the P/E grow faster than shares. It creates an imbalance that eventually must be accounted for. Especially for a firm that appears to be on the wrong side of industry-movement, CBS Corporation (NYSE:CBS) can’t be a buy right now.

Fox

The Fox Network is in an interesting position in this debate. Yes, it’s a broadcast network, but it’s a part of a much larger operation that has already figured out how to monetize cable networks very well. NewsCorp. – despite its recent PR issues and the tangles that Rupert Murdoch has been in – is a very savvy company. If the trend of broadcast network’s competitive pressure continues Fox is the one most likely to do well, as it can leverage existing cable deals to maintain its business.

Which doesn’t mean it’s all sweet-smelling roses for the network. The reason to buy NewsCorp, if you’re interested, is because of its other properties. Fox News, the movie production, the entertainment production arms and so forth are what makes it worthwhile. It also controls a decent share of the cable market already so a transition will be smoother than other networks.

The trend is against them

The real issue here isn’t Time Warner Cable Inc (NYSE:TWC), or CBS or even Aereo. It’s that the industry that has been so dominant in entertainment for 60 years – broadcast television – is being forced through some serious changes. The execs you hear screaming about it are the ones making the age-old protest that they’ve made profits before and they should be assured of doing so in the future. Well, it doesn’t work that way. In today’s era of technological change, we all have to be quick on our feet and learn to adapt. If the broadcast networks don’t – and the cable companies do – it’ll quickly become apparent which shares you should have.

Good luck!

The article Time Warner Cable and the End of Broadcast Television originally appeared on Fool.com is written by Nate Wooley.

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