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3 Major Threats Could Send This Huge Industry Off A Cliff

 March 13, 2012 01:49 PM
 


You have to hand it to cable companies. For years, they continually boosted prices and still managed to retain customers. Only recently has their customer base begun to shrink modestly. But thanks to several recent developments, the pace of customer defections looks set to accelerate. This implies that sales and profits may soon peak (if they haven't already), and with some pretty hefty debt loads, certain companies may see their shares plunge.

Rising costs, sinking value
Cable companies such as Time Warner (NYSE: TWC), Conmcast (Nasdaq: CMCSA), Cablevision (NYSE: CVC) and Charter Communications (Nasdaq: CHTR) aren't fully to blame for their current predicament. Key cable network operators such as Disney (NYSE: DIS), which owns ESPN and others, have forced the cable companies to pay ever-higher fees, and those costs needed to be passed on to the consumers. Trouble is, consumers are no longer mesmerized by the option of more than 100 channels, realizing that they watch only a handful of broadcast and cable networks.

This created an opening for the likes of Netflix (NASDAQ: NFLX) and Hulu.com to start winning converts, some of whom have "cut the cord" with cable companies. Yet it is three recent moves that really threaten to make consumers flee in droves.

Threat No.


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