In a Hi-Tech World, Cable Still Rules

Cable operating companies are doing very well. Of course, I don’t see Black Oak Enterprises or myself ever getting into that business. I learned a long time ago that dealing in businesses involving one’s home is not something for me.

It harkens back to my days taking classes to become a real estate agent. While selling people houses and renting out apartments was something I could deal with, an instructor warned me that being a landlord is about as crummy and dangerous an occupation there is. I can only imagine that running a cable company and bringing materials into somebody’s house for a fee is just as demanding and scrupulous. And even if running such a business meant that I personally never had to physically step foot into the house of a customer who is critical of my service, I wouldn’t dare sit behind a desk and ask other people to do something I wouldn’t do.

That being said, for those who run cable companies, the recession appears to be over. Comcast, who just recently bought NBCUniversal, just reported a 7.2% increase in revenue this past quarter. That’s a pretty substantial amount, especially in a country where the unemployment rate is almost 10%. Naturally, that high unemployment rate resulted in a loss of cable subscribers for Comcast last quarter, 135,000 losses to be exact. However, because of an increase in cable fees and the popularity of the standard “triple play” package, Comcast , and other cable operators like Cablevision, have managed to increase their revenue per subscribe enough to generate more revenue and more profits.

America’s willingness to pay more for the channels and television shows they love only strengthens my desire for Black Oak Enterprises to one day have its own cable channel. Despite all of the technology out there, despite a growing notion for “TV Everywhere,” and with no regard to the ability to steal content online, people in America are paying more for cable television than they ever have before. And that my friend, just goes to show you what quality content is worth.

When speaking about his company’s past quarter successes, Stephen B. Burke, the new CEO of NBCUniversal, spoke very highly of his entity’s cable properties, like USA and Bravo. And why wouldn’t he? The cable properties make up the majority of NBCUniversal’s profit, and will continue to do so for at least the next five years.

Just because cable is doing well though, does not mean that it will not have to get with the times. “TV Everywhere” will have a major impact on cable channels. Many of them will have to decide whether or not allowing their content to be watched freely and randomly online is a viable way to grow their business. And there are already huge questions about selling content directly to consumers. For example, MTV debated heavily last year whether or not to allow their shows to be sold individually on iTunes. Other networks, like CBS, have already experimented in doing so. But of course, making content available online means some people will drop their cable subscriptions. And a cable channel that allows their content to be purchased on iTunes may have difficulty asking for higher cable subscription fees, in which channels see the majority of their growth, when they have essentially diluted their content across other platforms.

All that said, some cable channels are already navigating new technologies exceedingly well. For example, USA makes its shows available on iTunes, but you would be hard pressed to find their shows any place else outside of the NBCUniversal umbrella. And with a record of being the most-watched cable channel in America over the past decade or so, it’s hard for cable companies to really threaten to walk away from USA during subscription fees negotiations.

Then there’s ESPN, which is the most technologically-advanced cable channel of them all. You can find ESPN content on just about every device, from mobile phones to the backseat of the chair in front of you on a Jet Blue flight. ESPN even has an internet website, where people can view their live content, but only if they are subscribers with a cable operator that is paying them for access to the website. It’s actually a rather ingenious use of their brand power.

So when I say that Black Oak Enterprises plans to enter this market, you best believe we have visions for what this landscape will look like five years from now and how to take advantage of it. It’s clear that many of our predecessors are doing quite well in the basic cable space, and we hope to join them there someday. I just hope they’re keeping up with the technological advances as well as we are. Because if we, or any other company for that matter, enters cable with a business model that takes advantage of everything in the marketplace, it could get ugly. Just ask the channels that have to compete with ESPN and USA on a day-to-day basis—hell, ask us when we’re actually stupid enough to take them on in the near future.

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