Disruptive Media and Prospects for Cable: the Cable Guy has Been Warned - Matt Kearney

Here is what the highly respected Wall Street Journal owned Barron39s had to say about Comcast earlier this weekquotamp8230amp8230it appears to have only one way to go and that is down There are many pressures creeping into Comcast39s market that will almost certainly introduce a new kind of competition that Comcast does not seem poised to deal with Mainly the disruption of television services by Google among othersamp8230amp8230quot source Barron39s October 3 2012In other words Comcast is in danger of losing relevance to newer companies delivering content And these are companies whose origins are firmly based online not in entertainment or cable distribution Instinctively that feels right As we consume more and more of our home entertainment on our tablets and computers and phones aren39t Apple and Google better placedSo are we at a watershed for cable platforms Comcast is huge well managed and performing very successfully as are other cable companies but we are already seeing cable victims of quotdisruptive mediaquotLodgeNet the sign of things to comeHas anyone been following LodgeNet the hotel cable network that reaches 12M hotel rooms with its quotOnDemandquot VOD serviceIts once highly cash generative business is suffering badly and its share price is firmly in the toilet True it39s still generating cash but its cash flow is declining dramatically and looks to be inadequate to repay its debtLodgeNet39s fundamental issue is relevance to today39s consumer The hotel guests are no longer separated from their home entertainment when traveling We have our laptops tablets WiFi NetFlix and Hulu When the guest is in the confines of the hotel room LodgeNet no longer has a monopolyAt its last earnings call LodgeNet reported a 7 decline in revenue per room per quarterIt also suffered a 7 decline in hotel rooms in its network Presumably if you39re losing relevance with the hotel guest you lose relevance to the hotel owners too So that39s a 14 decline per quarter in the core business revenues New CEO Richard Battista has some work to do We wish him wellAre Comcast or Time Warner Cable going to travel the LodgeNet pathWell cable companies generally and Comcast in particular have more lines of defense than LodgeNet hasFirstly we use that big fat pipe that they provide to connect our devices to the content we wantSecondly they have bundled subscription services for cable TV channels as well as strong payperview revenue while LodgeNet is reliant on payperviewThirdly and what I regard as a smart hedge Comcast now owns content through NBC Universal In this decade where distribution of content is moving so rapidly from broadcast to pointtopoint content regains its crown and is Content is King once more Time Warner Cable now a separate entity to the Time Warner content business is not in the same positionHowever just as LodgeNet no longer has a monopoly on the hotel room neither Comcast nor TWC any longer have the monopoly on providing video entertainment to a particular home If you39ve had a monopoly and got used to it with all those little price increases and slipping service standards that monopolists allow and then you lose that monopoly you better watch outYou can no longer expect your customer wait 3 weeks for a replacement settopbox or serve him notice that he39s about to be charged 395month for the modem that was previously provided free That39s right Time Warner Cable I can feel your blushes from hereSo Cable Guys check out LodgeNet and be warnedamp8230Matthew Kearney has been working in the media in London and New York in TV cinema and in online for nearly 20 years He joined the Daily Mail39s leading news site MailOnline last year Matthew can be reached at matthewjkearneygmailcomRead all Matthew39s MediaBizBloggers commentaries at Matthew KearneyCheck us out on Facebook at MediaBizBloggerscomFollow our Twitter updates MediaBizBloggerThe opinions and points of view expressed in this commentary are exclusively the views of the author and do not necessarily represent the views of MediaBizBloggerscom management or associated bloggers MediaBizBloggers is an open thought leadership platform and readers may share their comments and opinions in response to all commentaries

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Disruptive Media and Prospects for Cable: the Cable Guy has Been Warned - Matt Kearney

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