Bid to Take Cox Private Shows Value of Digital

Corinthian (COCO - commentary - Cramer's Take) vs. Cox (COX - commentary - Cramer's Take). Career Education (CECO - commentary - Cramer's Take) vs. Charter (CHTR - commentary - Cramer's Take). University of Phoenix Online (UOPX - commentary - Cramer's Take) vs. Cablevision (CVC - commentary - Cramer's Take). Apollo (APOL - commentary - Cramer's Take) vs. Comcast (CMCSA - commentary - Cramer's Take). Both groups of stocks have been getting hammered. Both groups of stocks have been falling apart.

So let me ask you a question. Do you think that anyone at Corinthian is thinking of taking Corinthian private? Do you think that the Career Education folk are huddling with bankers right now about making a bid for the whole company? Do you expect University of Phoenix and Apollo to make some hard decisions about $85-a-share buyouts?

Nope. Not a chance. Heck, I wouldn't be surprised if we discover that the insiders dump these shares still because they may not be real long-term businesses at all, let alone growth businesses.

Meanwhile, here's Cox trading up a dollar and a half from where the company's trying to take it private because the real buyers in this business know that each cable subscriber who migrates to a digital box is like an annuity stream that might be worth $5,000 per. Yes, $5,000 per. And the people who don't take the basic? They aren't the customers who these companies want anyway.

I am not being cavalier. It took Ivan Seidenberg and his really smart people at Verizon (VZ - commentary - Cramer's Take) four years before people recognized that a wireless customer is worth much more than a wire-line customer. It might take as long as for the cable companies to convince people that their high-end valued customers, their "wireless" customers, are worth much, much more than the customers they are losing.

But things like this Cox bid take matters pretty quickly into the hands of the cable companies. Despite what you have heard from the media, Paul Allen could take his Microsoft (MSFT - commentary - Cramer's Take) dividend and buy the rest of Charter if he wanted to, if his internal calculations are based on Cox at $3.67. That's what the Cox metric works to. Believe me, I don't want that to happen. It is too much of a steal vs. what I think the company's really worth.

---

At the time of publication, Cramer was long Comcast and Charter.

James J. Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for Action Alerts PLUS. While he cannot provide personalized investment advice or recommendations, he invites you to send comments on his column to [e-mail]. Listen to Cramer's RealMoney Radio show on your computer; just click here. Click here to buy Cramer's latest book, "You Got Screwed!" Click here to order Cramer's autobiography, "Confessions of a Street Addict."