Excerpt from today's One Page Annotated Wall Street Journal Summary
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With NBC Pact, YouTube Site Tries to Build a Lasting Business and Warner Bros. To Offer Content Online via Guba
- Summary: Short video site YouTube's phenomenal growth has been plagued by infingement of copyright problems. Although launched as a way for users to share home videos, it quickly became a destination for clips from TV shows and movies. NBC Universal has partnered with YouTube for promotion of its programs. By offering ads in video clips, YouTube now offers a way for content owners to generate revenue and therefore provide their programs for legitimate distribution on the site. Meanwhile, Warner Bros will distribute movies and TV shows via video search engine Guba, which currently has about 500,000 monthly users.
- Comment on related stocks/ETFs: NBC Universal is owned by General Electric (NYSE:GE), but there's no stock impact here. More important is the longer-term threat of Internet sites like YouTube and MySpace to current distribution channels such as the cable and satelite network operators. MySpace, owned by News Corp (NASDAQ:NWS), replaced YouTube with its own video service. Warner Bros. is owned by Time Warner (NYSE:TWX).
- Summary: AT&T launched its TV service in San Antonio, charging $59 per month for a bundle of services that it claims offer more than comparably-priced cable TV service. AT&T offers "faster channel surfing, three set-top boxes, an interactive program guide and digital video recorder", but cable offers more channels and digital TV.
- Comment on related stocks/ETFs: The competition to provide next generation TV and Internet services between the telcos, cable companies, and movie rental companies looks suspiciously like a zero-sum game, at least in the short run. The range of services that consumers are willing to pay for isn't growing, but competition is. A price war for the Internet/TV bundle will negatively impact all the stocks. AT&T (NYSE:T) and Verizon (NYSE:VZ), who bear the cost of building new fiber optic networks and whose core fixed-line telephone revenues are under threat, have most to lose.