Netflix Disrupts TV Again: Will Traditional Cable Waive the White Flag?

Netflix Disrupts TV Again: Will Traditional Cable Waive the White Flag?

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Netflix is reportedly in talks with cable providers to stream directly to cable sets. Does this mean they've won?

Multiple sources are now reporting that the online streaming website Netflix (NFLX) might soon beam content straight to your television set. First they successfully partnered with the British cable provider Virgin Media, in a deal that would run Netflix straight through to the televisions of UK viewers with a TiVo box.

Now Netflix is turning its attention to making a similar arrangement with American cable providers.

Talks are still underway, supposedly between representatives from Netflix and two of the largest cable providers in the US, Comcast (CMCSA) and Time Warner (TWX). The deal would further blur the lines between traditional television and the new streaming websites that compete with, alongside, above, basically all around them. 

The move illustrates two important trends:

  • The increasing pressure for television providers to provide on-demand content for younger viewers.
  • The continuing resilience of traditional TV among older, and wealthier providers.

The fact that cable companies may soon have to liaise directly with the products that threaten to put them out of business further demonstrates the increasing importance of the internet – while also making the "disruptive" product more and more like the products it threatens. 

This comes at a time when a number of media companies have begun exploring new partnerships as a way to buoy falling revenues. One of the largest cable providers in the country, Comcast has recently partnered with the social networking giant Twitter in an effort to streamline television-related tweets into a special service called "See It."

The service will allow people to tweet directly at TV shows, and use social networking data to track ratings for advertisers. While only content from Comcast networks will appear on the feed initially, representatives from Twitter are supposedly courting other networks as well.    

Investing ideas

Netflix is one of the biggest gainers in terms of stock price over the course of the last year. The company's one year return is almost 400%, more than any other stock on the S&P 500.

And today the stock appears to be on a run as well, with shares trading up almost 7% as of 2:40pm EST. This follows reports of insider selling among high-level executives, however those trades don't appear to have had much effect on the share price so far.

So will Netflix and other alternative forms of TV providers find more common ground with traditional cable networks? And do they all deserve a place in your portfolio? Consider the list of television-related stocks below.

Click on the interactive chart below to see analyst ratings over time. 

Do you see investment opportunities in Netflix, Comcast, or both? Use the list of content providers and cable companies below to begin your own analysis. 

1. Netflix, Inc. (NFLX, Earnings, Analysts, Financials): Provides subscription based Internet services for TV shows and movies in the United States and internationally. Market cap at $18.72B, most recent closing price at $300.85.
 

 

2. Comcast Corporation (CMCSA, Earnings, Analysts, Financials): Provides entertainment, information, and communications products and services in the United States and internationally. Market cap at $121.60B, most recent closing price at $40.06.
 

 

3. Dish Network Corp. (DISH, Earnings, Analysts, Financials): Provides direct broadcast satellite (DBS) subscription television services in the United States. Market cap at $21.77B, most recent closing price at $47.88.
 

 

4. Time Warner Inc. (TWX, Earnings, Analysts, Financials): Operates as a media and entertainment company in the United States and internationally. Market cap at $62.28B, most recent closing price at $67.41.
 

 

5. Amazon.com Inc. (AMZN, Earnings, Analysts, Financials): Operates as an online retailer in North America and internationally. Market cap at $141.78B, most recent closing price at $308.27.
 

 

6. Viacom Inc. (VIA, Earnings, Analysts, Financials): Operates as an entertainment content company in the United States and internationally. Market cap at $39.43B, most recent closing price at $82.36
 

 

7. Walt Disney Co. (DIS, Earnings, Analysts, Financials): Operates as an entertainment company worldwide. Market cap at $118.98B, most recent closing price at $66.21.
 

 

 

(List compiled by James Dennin. Analyst ratings sourced from Zacks Investment Research, market capitalization and closing prices sourced from Yahoo! Finance. All other data sourced from Finviz.)

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