Is it possibly for an Apple (AAPL) product to save you money? Despite Apple’s steep price tags and penchant for slowly sucking away the savings of its loyal users, Quentin Fottrell of MarketWatch suggests Apple TV might be able to cut our cable bills down.
To reach the goal of cable domination Apple was in talks last week with “some of the biggest U.S. cable operators to sell set-top boxes directly to consumers,” reports Fottrell. The talks went well and “the company was granted a patent for a set-top box to stream live TV and to record shows.”
While this sounds great for Apple, the cable companies would also win in the exchange: Apple would sell a device directly to consumers, a big change from the current situation that has cable companies leasing cable boxes to customers for $10-15 month. Doing so is a big hassle for cable companies, which must go out of their way to retrieve and maintain the devices.
There are some big financial incentives for cable operators to get out of the hardware business and focus on wireless and cable services. Equipment for consumers’ homes and businesses makes up about 40% of cable operators’ annual capital expenditure, and set-top boxes account for most of that amount, says market researcher SNL Kagan.
The average monthly cable bill is currently $86. If cable companies are able to save on the cost of hardware, they may be able to transfer those savings to consumers through more competitively priced packages.
Furthermore, in order for Apple to successfully replace cable boxes with its own product it will have to offer competitively prices (see: cheaper) hardware for the masses. At the very least, customers comparing products should be able to reason that the cost amortized over several years is worth replacing a $10-$15/month box rental.
For reference, “Apple currently sells a $99 set-top box that streams content from iTunes and other online media services like Netflix (NFLX) and Hulu, but not live television,” writes Fottrell.
Business Section: Investing Ideas
So which big name cable companies can expect to see changes from the widespread adoption of Apple TV? We list several U.S. CATV Systems and streaming content stocks below. Use this list as a starting point for your own analysis.
1. Comcast Corporation (CMCSA, Earnings, Analysts, Financials): Provides entertainment, information, and communications products and services in the United States and internationally. Market cap at $91.03B, most recent closing price at $34.02. The nation’s largest cable provider offers service to roughly 22.1 million consumers.
2. Time Warner Cable Inc. (TWC, Earnings, Analysts, Financials): Operates as a cable operator in the United States. Market cap at $27.51B, most recent closing price at $89.79. The second largest cable company in the U.S. offers service to 12.3 million customers.
3. Cablevision Systems Corporation (CVC, Earnings, Analysts, Financials): Operates as a telecommunications, media, and entertainment company. Market cap at $4.1B, most recent closing price at $15.14. Offers service to roughly 3.3 million subscribers.
4. Charter Communications Inc. (CHTR, Earnings, Analysts, Financials): Provides cable services to residential and commercial customers in the United States. Market cap at $7.84B, most recent closing price at $77.80. The country’s fourth-largest cable-TV provider offers service to 4.3 million customers.
5. AT&T, Inc. (T, Earnings, Analysts, Financials): Provides telecommunication services to consumers, businesses, and other service providers worldwide. Market cap at $214.43B, most recent closing price at $37.17. Offers U-verse TV to roughly 4.1 million customers.
6. Verizon Communications Inc. (VZ, Earnings, Analysts, Financials): Provides communication services. Market cap at $125.52B, most recent closing price at $44.06. Offers FiOS to roughly 4.5 million customers.
7. Dish Network Corp. (DISH, Earnings, Analysts, Financials): Provides direct broadcast satellite (DBS) subscription television services in the United States. Market cap at $14.33B, most recent closing price at $31.79. The third-largest provider of pay-TV signals serves 14.1 million U.S. subscribers.
8. DIRECTV, Inc. (DTV, Earnings, Analysts, Financials): Provides digital television entertainment in the United States and Latin America. Market cap at $32.42B, most recent closing price at $51.64. Offers service to roughly 19.9 million subscribers.
9. Google Inc. (GOOG, Earnings, Analysts, Financials): Google is the world’s most popular search engine. Market cap at $221.45B, most recent closing price at $677.14. Google recently announced that as part of its Google Fiber broadband Internet service it will be breaking into the cable TV business.
Compare changes in average analyst ratings for the stocks listed above:
Written by Rebecca Lipman. Subscriber data sourced from The Associated Press.
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- Comcast Corporation (CMCSA, Chart, Download SEC Filings)
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- Cablevision Systems Corporation (CVC, Chart, Download SEC Filings)
- Charter Communications Inc. (CHTR, Chart, Download SEC Filings)
- AT&T, Inc. (T, Chart, Download SEC Filings)
- Verizon Communications Inc. (VZ, Chart, Download SEC Filings)
- Dish Network Corp. (DISH, Chart, Download SEC Filings)
- DIRECTV, Inc. (DTV, Chart, Download SEC Filings)
- Google Inc. (GOOG, Chart, Download SEC Filings)
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