It's a question the industry's biggest players have been wondering about for years. In recent weeks, the country's largest television networks have been moving quickly, even frenetically, to position themselves for a time when most people will turn to a mobile device rather than the living room television for all their entertainment and communication.
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The reason is clear: Viewers, especially younger viewers, are cobbling together their own individually tailored collection of digital video platforms rather than ceding those decisions to their payTV provider. The simple fact is that the country's largest media companies, old-style conglomerates that have dominated video entertainment for decades, are actively preparing for LATB: Life After The Bundle.
The multi-channel pay-TV bundle, replete with dozens of niche channels that most subscribers don't watch, has been the bedrock of the cable-TV industry since its inception in the 1970s. It's the way Comcast (CMCSA) , Time Warner Cable (TWC) , the DISH Network (DISH) and others make money: in order to receive popular channels such as CBS (CBS) and Disney's (DIS) ESPN, subscribers must pay fees large enough to cover the cost of carrying those most-watched networks in addition to the smaller ones, even though they may never watch them.
But with media industry going digital and mobile, consumers have come to expec that they can curate their own personalized viewing, and the largest media companies are scrambling to meet that demand.
Take the latest news from Comcast's NBC/Universal.
Starting Tuesday, according to a report from The Wall Street Journal, NBC will live stream programming online, with mobile to follow soon after. ABC already does it, and CBS started its own digital network last month, so the "Big Three" fully - and finally! -- acknowledge that the model is changing.
For investors, it's time to analyze which companies can best manage the shift - and profit from it.
Speaking of ABC, Disney's attention appears to be properly focused on getting this transition right at ESPN, the sports juggernaut that may be the best annuity in the history of the world. ESPN generates more than $6 billion a year in fees, courtesy of cable and satellite-TV providers.
Most households pay more than $6 a month just for ESPN. The next most expensive pay-TV channel is Time Warner's TNT at about $1.44 per subscriber, according to Kagan Research. That's a distant second-place. No wonder that Disney CEO Robert Iger told investors last month that he's not looking to create standalone digital service similar to what Time Warner says it plans to do with HBO.
Disney is spending billions to retain the rights to cover the largest U.S. sports, football and basketball, both college and professional. But public sentiment against subscriber fees is growing and, in response, media companies like Disney are doing more than hedging -- they are investing heavily in the hedge.Must Read: Jim Cramer’s 5 Best Stock Picks for the Biotech Sector