OTA is not a long-term option for a pretty large majority. IPTV services are pretty thin and out of the picture for many who don't have fat pipes to the Internet. We hear accounts often of those that have experimented with cutting the cord and how they're not particularly satisfied.
OTA won't appeal to a majority. But it is appealing to far more each year.
August 6, 2013, 8:14 p.m. ET
CBS-Time Warner Cable Dispute Shows an Industry Unaware of Reality
It was a mere coincidence that news of the Post sale broke right after Mr. Britt had sent his latest missive to Mr. Moonves in a months-long squabble over money. But the timing highlighted the essence of what another cable executive, Jim Dolan of Cablevision Systems Corp., CVC +0.67% was quoted saying Monday: The pay-TV industry is in a bubble. And it remains perilously out of touch.
But as Messrs. Dolan and Ergen have acknowledged, these arrangements aren't sustainable. Younger people watch what they want online, making the idea of cable TV less appealing. The percentage of people age 13 to 33 subscribing to pay TV fell to 76% this June from 85% in June 2010, a new study by research firm GfK found.
"Cord cutting used to be an urban myth. It isn't any more," said cable analyst Craig Moffett in a report Tuesday.
How profitable is DTV? Anyone who crunches numbers will tell you that an operating margin of 20% or more is exceptional.
From its 2Q13 earnings report, DTV reported an EBIT margin of 20.9%. Its EBITDA margin is 27.8%. (FOR DTV US OPERATIONS)
Up until one decade ago, The Washington Post once had similar margins, with an EBIT margin of 25%, sustained, year after year. As Buffet said, owning a newspaper was having a license to print money.
Today, its operating margin is 2%.
Edited by Gloria_Chavez, 11 August 2013 - 12:40 PM.