I recently added HBO to my cable television subscription. I
enjoy the series and the extra movie options I have on the several
channels on cable line up. What I enjoy more is HBO GO. I am not
HBO GO is a service that comes free with the subscription and
allows me to stream content to a phone, tablet, computer or
streaming device like Roku or Apple TV. Since I recently got a new
laptop with an HDMI slot, I connect the laptop right to the TV.
Perfect picture and tons of content. Much more content than is
available from On Demand and the speed of access to that content is
many, many multiples faster.
I now watch HBO GO more than I do the regular channels of HBO
because I have access to 263 movies and ALL of the series, not just
part of one season.
This made me think of the future and how there will not be a need
for cable companies down the road... and that is just fine with me.
For years I have been paying a king's ransom for 38 cooking shows
that I never watch or channels that have a questionable existence.
Soon I will be able to stream right to my large screen TV and get
to choose what I want.
Services that push content, like how Pandora pushes music will pop
up on the broadcasting side of the internet to address the idea of
discovery. But make no mistake about it, demand and choice will
drive the majority of future viewership. I will watch the Jersey
Shore whenever and where ever I want to catch up with Ronnie and
Sammie and the rest of the crew.
Even if the Facebook IPO and subsequent meltdown slows some of the
new ideas into the market, these push or discovery streaming
companies are coming. They will also likely come to investors are
much cheaper rates thanks to the IPO debacle.
While this is still years away, we can still get ready for it by
protecting ourselves from the losses that are inevitably going to
come. Where are the losses? Well the cable companies and the
satellite providers will be most directly impacted. We saw it in
newspapers before and now the cable companies are next.
In the Crosshairs
) passes about 12 million homes are delivers internet to 3.5
million homes. Its stock is at close to a 52 week high and is a
Zacks #3 Rank (Hold), but I think it's going lower. Investors are
clearly looking past the fact that the company has reported 7
straight earnings losses, all of which have been well below
consensus. While internet delivery is still going to be a backbone
service Charter splits its internet revenue with a separate
backbone provider. So the growth engine for this company will not
generate the full effect for shareholders. Gains that investors may
have made in this name will be the target of streaming companies.
Analysts have slowly caught on to what is happening at CHTR. In
August of 2011, earnings estimates for 2012 stood at $2.41 and have
since moved to a loss of $1.80 a share. Estimates for 2013 have
also seen similar decapitations, moving from $4.69 to the current
level of $0.48, a decrease of nearly 90%.
) is another such example or a cable TV provider that doesn't
possess the full internet pipeline that is going to truly hook the
consumer. Yes Dish serves nearly 14 million customers with an
excellent variety of programming choices, but soon most of those
choices will be available on the internet.
Analysts have already noticed the trend, and have moved estimates
lower for 2012 and 2013. In August of 2011, estimates for 2012
stood at $2.91 and have since moved lower by $0.10. Over the same
time period, 2013 estimates have contracted from $3.07 to $2.87.
) is bigger than DISH, with about 20 million customers in the US,
and another 12 million in Mexico and South America. Maybe the
demand for internet isn't as large in South American and DTV will
have a little more "lasting" power, but urban centers will thrive
on the internet broadband or fiber to the home.
DTV bucks the trend of lower future estimates. To keep the
consistency with the other stocks, DTV has seen estimates increase
from August 2011 to the present for both 2012 and 2013. 2012 has
seen an increase of $0.12 to $4.34 in expected earnings. 2013
estimates have increased $0.05 to $5.31.
), with its more than 22 million cable subscriber and 18 million
internet customers as having one of the more defensible positions
in the industry. Yes the ratio of internet to cable is compelling
but there is the idea of the ownership of NBC and Telemundo. Those
content providers will benefit from the coming switch, even if they
are owned by cable companies.
Make no mistake. Streaming from the internet is the wave of the
future and its coming. It won't happen in 2012 or 2013, but we will
feel the first rumblings in 2014. After that, its downhill for
these cable providers. That idea alone should make you want to
rethink your position if you own CHTR, DISH or DTV.
Brian Bolan is an Equity Strategist for Zacks.com. He is also
the Editor in charge of the
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CHARTER COMM-A (CHTR): Free Stock Analysis
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