In breathless prose that it does so well, CNBC sounded the alarm bell about the future of television.
Check out the first paragraph:
“An alarming survey by Credit Suisse should serve as a wake up call to the broadcast networks and cable companies that they need to take control of their revenue destiny right now, while they still have some negotiating power. Analysts there found that 37 percent of Netflix subscribers aged 25 to 34 substitute Netflix for pay television. Almost 30 percent of users between 18 and 24 are using Netflix’s streaming service instead of cable or satellite.”
The Credit Suisse analysts downgraded the entertainment sector based on the survey and the proliferation of pay TV services from everybody from Hulu to Amazon.com Inc. (NASDAQ:AMZN). What’s odd about this story is that CNBC and the other media sites who covered this story are not making a bigger deal that the poll was of 250 people. That is hardly enough to make sweeping generalizations about the future of the media. Media reports do not mention the poll’s methodology, which indicates it may not be scientifically valid. Gallup, the premiere polling company in the world, often uses sample sizes of more than 1,000 people.
Nothing is really surprising in the note. For many on Wall Street, Netflix Inc. (NASDAQ:NFLX) can do no wrong. Its shares are up more than 200 percent this year as investors bet the spunky upstart would steal business from the media establishment. Cable, however, remains one of the most despised sectors on Wall Street. Shares of Comcast Corp. (NASDAQ: CMCSA), the number one cable company, are little changed this year. Time Warner Inc. (NYSE:TWX) and Walt Disney Co. (NYSE:DIS), the two biggest media companies, fared a little better. They are each up less than 10 percent.
What Credit Suisse’s provided does not prove or disprove anything. It did sound any alarm bells because they were raised long ago.
–Jonathan Berr
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