Is it EchoStar
(DISH)
? Or is it foreclosures? Is it DirecTV
(DTV)
or is it bills that are too high? Is it Verizon
(VZ)
or is it house poor fears?
We will debate the Comcast
(CMCSA)
blowup for a long time. Trying to figure out how a monopoly utility that we used to regard as a utility that could no more be shut off than Con Ed, has become a totally discretionary competitive item that needs to be sold and can't be pulled.
The implications either way show you the limits of this former wonder industry. For all of the years I have been in the business, investing in cable stocks worked. The companies always grew with consistent cash flow and that was enough. They were utilities that always talked about how dividends weren't tax-advantaged and instead focused on the broad expansion and cash flow growth.
They used their stocks to buy other cable outfits, roll them up, make them more efficient and generate even higher cash flow. They owned the rights to be solo in towns, rights that seemed only fair given that every town needs cable, and they gave towns a couple of community stations in return for being monopolists.
Things began to erode when it became clear that the Dish had something they didn't: the NFL, perhaps the most proprietary of programs out there. NFL Sunday ticket is simply unrivaled for a nation that will watch other teams besides their home teams.
Then, while they layered on phone service, they kept raising price. They raised price so much that it was worth Verizon losing billions to move into this turf. Given the gigantic gobs of money cellphones generate because of texting and video -- two products that didn't even exist not that long ago -- and given the pricing umbrella cable set, it is almost like OPEC charging $90. Wham! The alternative energy/video delivery guys can come in underneath and give nice TVs away to boot.
Voila: Comcast, Time Warner
(TWX)
and Charter
(CHTR)
have, alas, now become uninvestable. Protected buybacks that have done nothing, in the case of Time Warner and Comcast, with no dividends to provide cushions even as they are not growth stocks any more, under assault from all sides including the rising cost of programming, cost of programming, there's just nothing here.
Which is why a shortfall for Comcast, even as it has lost a third of its value in the last few years, still does not make it a buy.
Random musings: Does this news make Cisco
(CSCO)
, which has a big cable component, a sell? Looks like people have been selling that one down relentlessly anyway, but I like it a heck of a lot more than Comcast. ... Will I see you tonight at my book signing? Meet me at 7 p.m. EST in New York City's Union Square Barnes & Noble. And if you can't make it then, I'll look for you next Wednesday, Dec. 12, at 7 p.m. in Bridgewater, N.J.'s Borders; or Saturday, Jan. 12, at 1 p.m. in Westbury, Long Island's Costco.
At the time of publication, Cramer had no positions in stocks mentioned.Jim 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. Watch Cramer on "Mad Money" weeknights on CNBC.
To preorder Cramer's newest book -- "Jim Cramer's Stay Mad for Life: Get Rich, Stay Rich (Make Your Kids Even Richer)," due in stores Dec. 4 -- on Amazon, click here.
Click here to order "Mad Money: Watch TV, Get Rich," click here to order "Real Money: Sane Investing in an Insane World," click here to get "You Got Screwed!" and click here for Cramer's autobiography, "Confessions of a Street Addict." While he cannot provide personalized investment advice or recommendations, he appreciates your feedback and invites you to send comments by clicking here. TheStreet.com has a revenue-sharing relationship with Amazon.com under which it receives a portion of the revenue from Amazon.com purchases by customers directed there from TheStreet.com.
