Forget Talk of 'Net Video; TV Isn't About to Cut to Black by Eric J. Savitz
Summary: Barron's Technology Trader Eric Savitz says internet video is over-rated as a challenger to cable TV. Other worries -- that telcos will grab market share with fiber-optic TV, or that digital recorders will dilute advertising dollars -- have done little more than to create cheap stock prices. Cable guru Craig Moffett of Bernstein Research notes that just 1% of all video watched is via the internet, 2% is via DVD -- and 97% still comes from traditional television. Based on Ebitda [earnings before interest, taxes, depreciation and amortization] multiples, he says, TV stocks are among the cheapest non-financials around, and pay-TV giant Comcast (NASDAQ:CMCSA) is among the 15 cheapest S&P 500 stocks. He also raised his targets on Time Warner Cable (NYSE:TWC), DirecTV (NASDAQ:DTV) and EchoStar (NASDAQ:DISH). Falling high-definition TV prices and consumer enthusiasm have owners plunking down their cash for high-def TV subscriptions (internet video is sub-DVD quality). Other bullish signs: Recently, Apple (NASDAQ:AAPL) CEO Steve Jobs said iTunes-connected AppleTV is just "a hobby." Sony Corp. (NYSE:SNE) just announced a new line of low-price flat-panels. And Warner Bros. (NYSE:TWX) said it is considering broader simultaneous releases of VOD and DVD movies based on successful trials with Comcast (a blow to Netflix Inc. (NASDAQ:NFLX)).
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