Goodbye, TV?

Sports better pay off soon for cable and satellite companies

Andrew Willis 10 August, 2020 | 1:32AM
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Andrew Willis: With more people tuning in to their favourite shows in lockdown, we saw online streaming services, like Netflix (NFLX), benefit - but not traditional television. Customers have been cutting the cord en masse, and rather than companies responding by improving value, they increased prices while still subjecting many viewers to tv ads.

Traditional distributors like cable and satellite companies face a harrowing future. Sector director Michael Hodel no longer believes the media industry has the wherewithal to fix its television problems… they’re milking what’s left of TV to fund new streaming offerings.

But, it could be worse. Smaller media companies are in for a challenge. Without strong sports or news franchises to entice someone to tune into an actual old-fashioned ‘TV channel’, we think they’re weaker than the larger, diversified players like AT&T (T).

Companies like AT&T are a good example of why investors in big media shouldn’t be panicking (or be particularly excited for that matter). While telephones and television might not seem to mix as well as the internet and television, those services, still carry enough value…on their own. AT&T’s decision to buy Time Warner was ill-advised, but it made them a “behemoth” as others sink, swim or stand.

Through sheer size, we may yet see the companies behind our cable bills survive and even grow – if anyone’s watching.

For Morningstar, I’m Andrew Willis.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
AT&T Inc16.51 USD1.10Rating
Netflix Inc555.04 USD-9.09Rating

About Author

Andrew Willis

Andrew Willis  is Senior Editor at Morningstar Canada. He previously produced content for Fidelity Investments and finance industry events for Euromoney Institutional Investor and has written in the past for Thomson Reuters and CNN. Follow him on Twitter @Andrew_M_Willis.

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