Are Wireless, Cable TV & Content Providers Converging?

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The U.S. wireless, cable TV and media services are gradually coming together in one platform. Rapid technological advancement is systematically redefining the parameters of the wireless, cable TV and media industries. The convergence of these industries into a unified platform is rapidly changing the market landscape. Will 2018 witness more mergers and acquisitions between wireless, cable TV and media companies?

Industry Overlapping

Wireless networks are acting primary catalysts of the overall telecom industry. Powered by strong WiFi network, cable TV operators are gradually entering the wireless field through MVNO (mobile virtual network operator) agreements with incumbent carriers. Meanwhile, major telecom operators are entering the pay-TV industry, especially through online TV streaming services.

At the same time, cable TV and telecom giants are foraying into the media industry with big ticket acquisitions. Comcast Corp. CMCSA became a media mogul after acquiring NBC Universal in 2011. AT&T Inc. T is currently awaiting the regulatory approval for its proposed $85.4 billion cash-and-stock deal to acquire media giant Time Warner Inc. TWX .  Verizon Communications Inc. VZ has acquired AOL and the core businesses of Yahoo.

Per a recent Reuters report, Comcast is mulling to bid for an all-cash offer for the media assets that Twenty-First Century Fox Inc. FOXA for as much as $60 billion. Notably, The Walt Disney Co. DIS has already offered $52 to acquire Twenty-First Century Fox.

Twenty-First Century Fox has a Zacks Rank #4 (Sell). All other above mentioned stocks carry a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

Technological Advancement

The legacy local and long-distance wireline phone services have largely been replaced by wireless services. This in turn has resulted in massive deployment of airwaves and optic fiber-based networks.

Now, online TV streaming services are quickly replacing legacy TV viewing thanks to an unprecedented growth of smartphones. This has resulted in the merger of content creation and distribution. Emergence of digital media and robust growth of digital advertisement are major catalysts to this trend.

Online Video Streaming Service: The Next Battle Field

Internet TV streaming service is gradually gaining market traction globally. Exponential growth of mobile data usage supported by flourishing high-end smartphone and tablet devices, has altered the entire dynamics of the traditional pay-TV industry.

At present, the web-based digital media market is growing by leaps and bounds. Digital media brands are becoming immensely popular with the younger generation. Consumers are increasingly switching to watching videos online, and preferring low-cost over-the-top (OTT) video streaming service over costlier legacy pay-TV connections.

Chart below shows price performance of six stocks mentioned above year to date.

Business models and the economics of the wireless, cable TV and media industries are changing. Content creators and distributors are trying their best to ascertain the mood of the consumers to deduce ways to make content and advertisements more personalized.

Bottom Line

Likewise, advertisement on the mobile video platform is gradually shifting from simple selling of banner ads to automated or programmatic ad selling. All these forces are moving toward wireless-cable TV-content convergence. 

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Time Warner Inc. (TWX): Free Stock Analysis Report

The Walt Disney Company (DIS): Free Stock Analysis Report

AT&T Inc. (T): Free Stock Analysis Report

Verizon Communications Inc. (VZ): Free Stock Analysis Report

Comcast Corporation (CMCSA): Free Stock Analysis Report

Twenty-First Century Fox, Inc. (FOXA): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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