Interesting article this morning in the WSJ about Sinclair Broadcastings dealings with Mediacom over payments to Sinclair for their transmissions. Consider that traditionally, neither you or I or for that matter, the cable companies paid anything for the traditional over the air broadcasts of television shows, as long as you had a good pair of rabbit ears prior to the introduction of cable tv, you were good to go. Television was free so to speak. The cable operators have not paid for this local programming from the likes of CBS, ABC etc. This is changing. With threats from Sinclair to blackout the Superbowl, Mediacom relented and agreed to an undisclosed payment amount to insure they were able to deliver the big game to their subscribers.
Cable stocks have been hot over the last year, with TWX rising 20% and Comcast up over 50%. This growth has in part been driven by the triple play offerings, cable tv, high speed internet and now telephone that they can bundle and sell for one price. With the new power being exerted by the traditional broadcasters, the question is what kind of effect will this have on future profits? Will it be significant or will it amount to a drop in the bucket?
I own CMCSA, TWX and NTLI which is a U.K. cable provider. This sector has served me well over the last few months, but this new development bears watching and more than a little digging under the covers to see what is really going on. Any reader comments are welcome.
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