Can cable companies band together to stave off Netflix?

Credit: Reuters/Rick Wilking

John Malone, a billionare with substantial investments in the Cable TV industry believes cable operators must band together in order to compete with Netflix and Hulu or more accurately, the media giants Netflix and Hulu are quickly becoming.

Given how poorly and slowly cable operators have adapted to the onslaught of consumers getting their television and film content online, it's not a bad proposition. But the messaging sucks. John McDuling reporting for Quartz:

...because the fact is, he [Reed Hastings of Netflix] buys programming on a national footprint, and he distributes it ubiquitously over the Internet and at the moment, his distribution, local distribution is incrementally free then,” he said at the company’s investor day.

Netflix is using the internet as a proverbial trojan horse. His assessment is fair. Then says, "That’s not a situation that I think, can persist indefinitely." Honestly it could and I think that is what many cable operators fear. That Netflix, Hulu and the internet will in fact become the defacto delivery method for television and film media.

The article was a great read until the 3rd paragraph from the end. Writer must have run out of common sense.

Online streaming services like Netflix and Hulu, meanwhile, are able to offer content much more cheaply because they pay nothing to transmit content over the internet.

Netflix's 12-month operating costs were $2.96 billion ending June 30th, 2013. It's tempting to venture that maybe John McDuling meant "pay nothing to cable operators to deliver similar content to their TV packages". But that likely isn't the case.

Either way, Malone is on to something. But unfortunately it teems of anti-trust and price-fixing. The next 10 years will be interesting.

October 10, 2013  ·  Source