The Cable Hike – Time Warner Cable (NYSE:TWC)


The current monthly cable billing trends has come under severe speculation, in the U.S. At this stage, there is a continued blame game taking place between Comcast (NASDAQ:CMCSA) and Time Warner Cable (NYSE:TWC). However, Disney (NYSE:DIS) is being seen as the real culprit behind all this. For many of us, Disney (NYSE:DIS) is known more, for its animated films and theme parks. For investors, the company is a media empire. In the year 2013, EPSN, the company’s prime element earned 45% of its revenues and 64% of its operating income.  The value of EPSN rounds up to $50.8 billion, which is one third of Disney (NYSE:DIS)’s total market capitalization.

Looking into EPSN charges, one can easily conclude that EPSN and EPSN 2 make up to 10% of the customer’s bill. EPSN charges a fee of $6.04 per month for the original channel and an additional $0.72 for EPSN 2. An average cable bill is a total of $64.41, and these two channels take the chunk of the bill. It is quite a money maker for Disney (NYSE:DIS).

Time Warner (NYSE:TWC) is the second most expensive cable channels. Its secondary channels, TBS and TNT are among the most costly channels in America. The reasons they get away with high costs are their live sports coverage and collaboration with the National Basketball Association. The latest contract will initially cost TNT three times more than the usual, but it shouldn’t come as a surprise for any one if these cost consumers, more monthly cable billing.

Most of these expensive channels are working in collaboration with major sports leagues, and that right there is what makes them popular and costly. Next in line is NFL Network and 3D channel; 3net, which is also owned by Disney (NYSE:DIS).

Consumers seem to place full blame on cable providers, but in light of aforementioned, it is not entirely up to the cable companies to decide the billing figures. According to a research conducted by SNL Kagan projects, by 2018 EPSN will charge $8.37 per month, a rise of 8.5%, hoping to attain more revenue for their shows. This is why Comcast (NASDAQ:CMCSA) is planning to acquire Time Warner Cable (NYSE:TWC) in the long run and offer better packages for customers.

But the latest trends have revealed a situation that is more troublesome than just the price hike. The current business model needs to be updated. This issue needs to be addressed, as current trends have shown a switch to stream based services, such as Netflix (NASDAQ:NFLX). These services are cost effective, and provide a much better quality visual quality, provided the internet connection is good. Due to this, pay TV subscription has taken a tremendous fall, and the one most effected company is Comcast (NASDAQ:CMCSA), as it is stuck between angry customers, not willing to pay and channel owners; Disney (NYSE:DIS) and Time Warner who keep increasing prices. Both stakeholder need to address this issue, in order to avoid a colossal market collapse of the cable industry