InvestingDaily.com

Account Information

  • My Account

    Manage all your subscriptions, update your address, email preferences and change your password.

  • Help Center

    Get answers to common service questions, ask the analyst or contact our customer service department.

  • My Stock Talk Profile

    Update your stock talk name and/or picture.



Close
FEATURED STRATEGY

These contrarian stocks thrive in good markets and bad

These contrarian stocks thrive in good markets and badIn my new profit guide, I reveal a group of super-safe stocks that don’t behave like regular stocks during market downturns. In fact, these rock-solid beauties historically SKYROCKET and THRIVE during the worst of times. During the last three market busts, stocks in this contrarian sector soared 42%… 135%… and even 200%. Do yourself a favor. Check out my free profit guide today.

 

Media Mergers: Why You Want to Own the Booze

By Nick Lanyi on October 24, 2016

AT&T’s proposed $85.4 billion deal to buy Time Warner is the latest and largest mega-media merger. It won’t be the last.

Here’s why: AT&T andVerizon make their money giving customers high-speed Internet service at home, pay TV channels and, in some cases, Internet access to mobile devices.

The shorthand labels for these services are broadband, cable and wireless.

These are GREAT businesses. Demand for their services has been growing for years. But they’re not what customers actually want. They only provide access to what people want.

Broadband and wireless remain strong and growing businesses, although their growth will slow when they reach saturation of their markets – that is, when pretty much everyone who can afford broadband and wireless has it.

But cable has exhibited strong growth, as viewers’ desire for movies, shows, sports, news and other video content is insatiable – and cable is able to meet that demand with more channels, including premium channels, and pay-per-view offerings.

Yet there is a dark cloud lurking over the cable industry, in the form of a question that haunts cable executives like a waking nightmare: what if consumers could get access to all this great video content, in the comfort of their own home, without cable?

And that’s exactly what’s starting to happen.

Drinking at Home

Imagine a law that says you can only drink liquor in a bar. AT&T, Verizon, Comcast and other such companies are like bar owners in that scenario. They’re making money hand over fist because they own the only way to access what people want.

Now imagine the law is changing to allow people to buy liquor in stores and drink it at home. What would those bar owners do?

They’d try to own the liquor, right? That way they can get paid no matter where people choose to drink.

The fact is, there’s now compelling competition for pay TV, in the form of online video services. If you can watch your favorite shows online whenever you want, and stream live events such as sports and breaking news, why do you need pay TV at all?

That’s why cable providers need to own content. That way they get paid no matter how you watch it.

Comcast recognized this several years ago and snatched up NBC-Universal (and, this year, DreamWorks Animation). Now AT&T wants to do the same with Time Warner.

Verizon has chosen a different path so far, acquiring AOL and Yahoo! to boost market share in online and mobile advertising (another way to profit from people watching video in new ways). They’re also created Go90, a mobile video service that captures some of the emerging market for non-cable video. But I wouldn’t be shocked to see cash-rich Verizon looking to buy more content providers over the next few years.

So if as investors we want to own the liquor, not just the bar, we need to focus on content providers who know how to attract viewers. In recent years, that’s been companies like Time Warner, Disney, YouTube, Netflix, Amazon Prime – and many other small players who may be acquisition targets.

Netflix (Nasdaq: NFLX), for example, has a market cap right around $55 billion – similar to Time Warner’s market cap of $61 billion before the AT&T deal was proposed. The stock is expensive right now, thanks to a 20% run-up after announcing better-than-expected earnings last week.

But it’s made smart moves to become a creator of original content, including hit shows such as “House of Cards” and “Stranger Things.” And it’s a go-to source for movies, documentaries, old TV shows and other licensed content.

You better believe someone at Verizon is spending a lot of time looking at Netflix right now.

After all, that’s what consumers are doing.


You might also enjoy…

 

12 Stocks Virtually Guaranteed to Go Up in 2018

You may not believe it, but I have a calendar in my hands right now that tells me the exact date and time when a few stock are practically guaranteed to go up. 

Twelve of them, in fact.

And if you were to invest in them following the simple buy and sell instructions found in this calendar…

You could be making $1,181… $11,814…. and as much as $190,916 more than by using a “buy-and-hold” strategy.

And here’s the best part…

I’m giving away a few copies of this calendar to interested investors (First come, first served).

With this calendar, you could get higher profits with less risk.

Click here to get the full story, and to claim your copy.

Stock Talk — Post a comment Comment Guidelines

Our Stock Talk section is reserved for productive dialogue pertaining to the content and portfolio recommendations of this service. We reserve the right to remove any comments we feel do not benefit other readers. If you have a general investment comment not related to this article, please post to our Stock Talk page. If you have a personal question about your subscription or need technical help, please contact our customer service team. And if you have any success stories to share with our analysts, they’re always happy to hear them. Note that we may use your kind words in our promotional materials. Thank you.

You must be logged in to post to Stock Talk OR create an account.

Create a new Investing Daily account

  • - OR -

* Investing Daily will use any information you provide in a manner consistent with our Privacy Policy. Your email address is used for account verification and will remain private.