Stankey believes the vast majority of those 55 million to 60 million households that don’t cut the cord will be sports fans. And we’ll see a slimmer bundle of channels offered by distributors as a result. That means fewer subscribers to fewer networks.
WarnerMedia, AT&T’s media business, is well positioned to have a prominent place in that bundle. It owns valuable sports rights with the NBA and MLB, and CNN is a leading 24-hour news network.
But Stankey says HBO Max is an important hedge against further cord-cutting. Stankey says HBO Max is a great opportunity to pick up cord-cutters and establish or maintain a relationship with them. Moreover, it’s a relationship where it’s distributing content that it owns, instead of other companies’ cable networks.
Comcast is similarly trying to position Peacock to protect itself against cord-cutting. Like AT&T, Comcast also owns a big television media company, NBCUniversal. As consumers continue to cut the cord, Comcast needs to expand the distribution of NBCU’s content beyond the cable bundle in order to maximize its value.
Investors should expect other major media companies to follow suit, but they can’t all be winners. AT&T and Comcast have a slight advantage due to their broad customer relationships across connectivity services, but the continued decline in pay-TV subscribers will be a headwind for years to come. There’s still a long way to go before we reach Stankey’s long-term cord-cutting plateau.
Adam Levy has no position in any of the stocks mentioned. The Motley Fool recommends Comcast. The Motley Fool has a disclosure policy. This article was written by Adam Levy from The Motley Fool and was legally licensed through the Industry Dive publisher network. Please direct all licensing questions to [email protected]