Methods To My Madness Pt 3

My final post to this series is probably the least defined and most speculative post I’ve composed.  Many have attempted before and I’m sure many will follow, but the topic Cord Cutting and how to profit from it is filled with politics, regulation, evolutionary technology, disruptive practices and good old fashioned corporate greed coming together to create a minefield to negotiate for those seeking answers.

The Dividend Diplomats attempted, but more from a personal savings/choice viewpoint rather than gaining profit from the choice.  More recent was Evan Buck’s article – more notable for the comments.  Over Thanksgiving, I had the opportunity to travel to the Austin area and broached the subject to some of the tech savvy guests that work in the industry.  Once again, many opinions but no definitive answers.   My investments this year have been trending more towards content owners, but mine is but one subjective opinion.  So following I attempt to outline my rationale.

The world cord cutter world, as I see it, resides in three segments – The Carriers, The Providers and The Creators.  These, however, are not pure categories as companies can -and have – a one to many relationship.  For instance an AT&T is a Carrier (Mobile, Backbone) and Provider (U-Verse).  Comcast resides in all three segments.

Carriers probably have the strongest headwinds – at least in the short term.  Regulators and Legislators are typically late to the game which harnesses the big guys and gives those that disrupt an initial advantage.  Current government policy is not sustainable and is likely to be changed.  Usage plans that subsidize streamers over casual users are at the very least an infringement on capitalism.

As this baseline shifts, The Providers (or their customers) will begin paying more for their viewing pleasure.  Will Hulu be subsidized by its’ owners?  Can Tivo continue its’ survival?  Will Amazon slide back into annual losses?

Or can the resurrection of Netflix and Amazon as Creators save the day?  Also in the Creator camp are BCE (The Listener, for one), DIS, CMCSA, Fox and Viacom for others.  Then you have the sports teams – pure LIVE content.  But then the players all want a piece of the action.  And the owners don’t seem to be able to operate without running a deficit.  And will Disney continue to run ESPN in its’ current form?  And don’t forget carriage contracts.

I guess the answer is currently clear as mud and if you choose to play in this space, follow your instincts.

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