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3 Stocks to Watch From a Challenging Cable Television Industry
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The Zacks Cable Television industry players are focusing on bundled offerings and on-demand programming to counter challenges from cord-cutting as consumers shift away from traditional pay-TV options, including cable TV and satellite TV, to over-the-top streaming services with innovative content. The industry is evolving by leveraging its broadband infrastructure to meet changing consumer preferences and balancing traditional cable services with new streaming options to maintain relevance in the rapidly changing media landscape. Cable companies are benefiting from consistent demand for high-speed broadband and WiFi devices, driven by hybrid work and learning environments. Increased media consumption has been a key catalyst for industry leaders like Comcast (CMCSA - Free Report) , Charter Communications (CHTR - Free Report) and Cable One (CABO - Free Report) .
Industry Description
The Zacks Cable Television industry comprises companies offering integrated data, video and voice services, including pay-TV and Internet-based streaming content. These firms provide equipment like satellite dishes, digital set-top receivers and remote controls. Cable companies typically build or lease network backbones from telecom companies and purchase licenses to distribute programmers' content over these networks. They license content from programmers and sell advertising spots. The industry is capital-intensive, requiring significant investment in infrastructure, and is heavily regulated by the Federal Communications Commission. Industry players must balance the need for ongoing investment in technology and infrastructure with evolving consumer preferences and regulatory compliance to maintain competitiveness in the media landscape.
4 Trends Shaping the Future of the Cable Industry
Skinny Bundles, Original Content Driving Growth: Cable television’s ability to generate ad revenues outside traditional TV platforms, such as websites and digitally consumed platforms, provides increased scope for target-based advertising. Nevertheless, consumers’ unfavorable disposition, particularly toward advertising, has hit industry participants hard. Furthermore, the growing consumer preference for digital and subscription services over linear pay-TV and rental or outright purchase has compelled industry players to alter their business models. Cable television companies are now offering a variety of alternative packages, including skinny bundles, which are delivered at lower costs than traditional offerings. These companies are also innovating in terms of original content to be competitive against streaming service providers.
High-Speed Internet Demand Key Catalyst: The growing demand for high-speed Internet, including broadband, has aided cable television industry participants like Comcast and Charter. Improving Internet speed is fueling the demand for high-quality video and the trend of binge viewing. Further, a strengthening broadband ecosystem in international markets, along with the proliferation of smart TVs, is anticipated to drive growth. Also, the work-from-home trend and online learning have boosted Internet usage, thus supporting industry participants.
Cord Cutting and Matured PayTV Industry Hurting Prospects: The cable television industry is witnessing the rapid evolution of distribution platforms as well as embracing new players and advanced technologies. Declining profits of residential video services due to rising programming costs and retransmission fees have made survival difficult for traditional companies. Additionally, the heightened need for on-demand content has led to the mushrooming of streaming service providers, making it particularly tricky for traditional cable television companies to maintain a viewer base. Furthermore, the traditional pay-TV industry is maturing with widespread consolidation. Moreover, residential voice service revenues are declining due to the rising shift to wireless voice services.
Softness in Advertising Demand Impeding Business Growth: Persistent inflation and higher interest rates are having a detrimental effect on ad spending. Besides, the challenge with TV ads is that marketers have difficulty getting actionable metrics and insights, such as attribution data. At this time, marketers must look for outside-the-box solutions to extract conversion data from offline media. TV has taken a secondary role in most marketing strategies due to the growing influence of digital marketing. Many marketers are increasing ad spending on digital mediums due to their unmatched ability to deliver personalized messages that are easy to measure. Cable TV players are set to face competition for ad dollars from streaming service providers like Netflix and Disney, which are raising prices and introducing cheaper ad-supported packages now that their subscriber growth has slowed.
Zacks Industry Rank Indicates Dull Prospects
The Zacks Cable Television industry is housed within the broader Zacks Consumer Discretionary sector. It carries a Zacks Industry Rank #186, which places it in the bottom 24% of more than 250 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all member stocks, indicates encouraging near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
The industry’s position in the bottom 50% of the Zacks-ranked industries is a result of a negative earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are pessimistic about this group’s earnings growth potential. Since Aug. 30, 2024, the industry’s earnings estimate for 2025 has moved south by 2.8%.
Before we present a few stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock-market performance and valuation picture.
Industry Lags Sector, S&P 500
The Zacks Cable Television industry has underperformed the broader Zacks Consumer Discretionary sector and the S&P 500 composite over the past year.
The industry has declined 15.9% over this period against the broader sector’s growth of 28.2%. The S&P 500 has risen 18.1% in the said time frame.
One-Year Price Performance
Industry's Current Valuation
On the basis of the trailing 12-month EV/EBITDA, a commonly used multiple for valuing cable companies, we see that the industry is currently trading at 7.44X compared with the S&P 500’s 17.75X and the sector’s 11.69X.
Over the past five years, the industry has traded as high as 16.19X, as low as 6.26X and at the median of 7.85X, as the chart below shows.
EV/EBITDA Ratio (TTM)
3 Cable Stocks to Watch
Cable One: The company presents a compelling turnaround opportunity despite the second quarter's $438 million net loss due to non-cash impairment charges. The company demonstrated sequential revenue improvement with residential broadband revenues increasing 1.9% quarter over quarter, driven by a $2.39 ARPU increase to industry-leading levels. Strategic initiatives, including billing system migration completion, will generate $15 million in annual cost savings starting late 2025, while new value-added services and a mobile pilot program aim to enhance customer lifetime value. With $70.8 million in debt repaid during the second quarter and a strong liquidity position of $1.02 billion, Cable One's disciplined capital allocation and operational improvements position it well for sustainable growth as competitive headwinds subside and new product initiatives gain traction.
Shares of this Zacks Rank #2 (Buy) company have lost 55.4% year to date. The Zacks Consensus Estimate for CABO’s third-quarter 2025 earnings has moved north by 6.7% to $9.25 per share in 30 days. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Price and Consensus: CABO
Comcast: The company merits investor attention in 2025 following a solid second-quarter performance that demonstrated operational resilience despite industry headwinds. The company delivered 3% adjusted EPS growth and generated robust $4.5 billion in free cash flow, while its wireless business achieved record quarterly additions of 378,000 lines, showcasing convergence advantages. Theme parks revenues surged 19% with Epic Universe's successful launch, and Peacock improved profitability with 18% revenue growth and narrowed losses. The strategic Versant spinoff, expected by year-end, will unlock value by separating legacy cable assets worth $7 billion annually, allowing focused capital allocation toward higher-growth streaming and connectivity businesses. While broadband subscriber losses persist, management's go-to-market pivot shows early promise, positioning Comcast for improved performance as strategic initiatives mature.
Shares of this Zacks Rank #3 (Hold) company have lost 9.5% year to date. The Zacks Consensus Estimate for Comcast’s third-quarter 2025 earnings has moved south by 4.3% to $1.10 per share in 30 days.
Price and Consensus: CMCSA
Charter Communications: This Zacks Rank #3 company merits close investor attention in 2025 despite second-quarter challenges that triggered an 18% stock decline. While the company lost 117,000 Internet customers and faced subscriber headwinds, several catalysts position it for recovery. The transformative $34.5 billion Cox acquisition, approved by 99% of shareholders, creates America's largest cable operator with enhanced scale and $500 million in projected annual synergies. Charter's mobile momentum remains robust, with 500,000 net additions and 24.9% revenue growth, strengthened by the strategic T-Mobile partnership for business services, which is set to launch in 2026. Despite near-term pressures from competitive dynamics and the ACP subsidy expiration, Charter's infrastructure investments, improving video trends, and diversification into high-growth wireless markets provide compelling upside potential for patient investors navigating the evolving broadband landscape.
Charter’s shares have declined 22.5% year to date. The consensus mark for third-quarter 2025 earnings has moved north by 0.1% in the past 30 days to $9.61 per share.
Price and Consensus: CHTR
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3 Stocks to Watch From a Challenging Cable Television Industry
The Zacks Cable Television industry players are focusing on bundled offerings and on-demand programming to counter challenges from cord-cutting as consumers shift away from traditional pay-TV options, including cable TV and satellite TV, to over-the-top streaming services with innovative content. The industry is evolving by leveraging its broadband infrastructure to meet changing consumer preferences and balancing traditional cable services with new streaming options to maintain relevance in the rapidly changing media landscape. Cable companies are benefiting from consistent demand for high-speed broadband and WiFi devices, driven by hybrid work and learning environments. Increased media consumption has been a key catalyst for industry leaders like Comcast (CMCSA - Free Report) , Charter Communications (CHTR - Free Report) and Cable One (CABO - Free Report) .
Industry Description
The Zacks Cable Television industry comprises companies offering integrated data, video and voice services, including pay-TV and Internet-based streaming content. These firms provide equipment like satellite dishes, digital set-top receivers and remote controls. Cable companies typically build or lease network backbones from telecom companies and purchase licenses to distribute programmers' content over these networks. They license content from programmers and sell advertising spots. The industry is capital-intensive, requiring significant investment in infrastructure, and is heavily regulated by the Federal Communications Commission. Industry players must balance the need for ongoing investment in technology and infrastructure with evolving consumer preferences and regulatory compliance to maintain competitiveness in the media landscape.
4 Trends Shaping the Future of the Cable Industry
Skinny Bundles, Original Content Driving Growth: Cable television’s ability to generate ad revenues outside traditional TV platforms, such as websites and digitally consumed platforms, provides increased scope for target-based advertising. Nevertheless, consumers’ unfavorable disposition, particularly toward advertising, has hit industry participants hard. Furthermore, the growing consumer preference for digital and subscription services over linear pay-TV and rental or outright purchase has compelled industry players to alter their business models. Cable television companies are now offering a variety of alternative packages, including skinny bundles, which are delivered at lower costs than traditional offerings. These companies are also innovating in terms of original content to be competitive against streaming service providers.
High-Speed Internet Demand Key Catalyst: The growing demand for high-speed Internet, including broadband, has aided cable television industry participants like Comcast and Charter. Improving Internet speed is fueling the demand for high-quality video and the trend of binge viewing. Further, a strengthening broadband ecosystem in international markets, along with the proliferation of smart TVs, is anticipated to drive growth. Also, the work-from-home trend and online learning have boosted Internet usage, thus supporting industry participants.
Cord Cutting and Matured PayTV Industry Hurting Prospects: The cable television industry is witnessing the rapid evolution of distribution platforms as well as embracing new players and advanced technologies. Declining profits of residential video services due to rising programming costs and retransmission fees have made survival difficult for traditional companies. Additionally, the heightened need for on-demand content has led to the mushrooming of streaming service providers, making it particularly tricky for traditional cable television companies to maintain a viewer base. Furthermore, the traditional pay-TV industry is maturing with widespread consolidation. Moreover, residential voice service revenues are declining due to the rising shift to wireless voice services.
Softness in Advertising Demand Impeding Business Growth: Persistent inflation and higher interest rates are having a detrimental effect on ad spending. Besides, the challenge with TV ads is that marketers have difficulty getting actionable metrics and insights, such as attribution data. At this time, marketers must look for outside-the-box solutions to extract conversion data from offline media. TV has taken a secondary role in most marketing strategies due to the growing influence of digital marketing. Many marketers are increasing ad spending on digital mediums due to their unmatched ability to deliver personalized messages that are easy to measure. Cable TV players are set to face competition for ad dollars from streaming service providers like Netflix and Disney, which are raising prices and introducing cheaper ad-supported packages now that their subscriber growth has slowed.
Zacks Industry Rank Indicates Dull Prospects
The Zacks Cable Television industry is housed within the broader Zacks Consumer Discretionary sector. It carries a Zacks Industry Rank #186, which places it in the bottom 24% of more than 250 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all member stocks, indicates encouraging near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
The industry’s position in the bottom 50% of the Zacks-ranked industries is a result of a negative earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are pessimistic about this group’s earnings growth potential. Since Aug. 30, 2024, the industry’s earnings estimate for 2025 has moved south by 2.8%.
Before we present a few stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock-market performance and valuation picture.
Industry Lags Sector, S&P 500
The Zacks Cable Television industry has underperformed the broader Zacks Consumer Discretionary sector and the S&P 500 composite over the past year.
The industry has declined 15.9% over this period against the broader sector’s growth of 28.2%. The S&P 500 has risen 18.1% in the said time frame.
One-Year Price Performance
Industry's Current Valuation
On the basis of the trailing 12-month EV/EBITDA, a commonly used multiple for valuing cable companies, we see that the industry is currently trading at 7.44X compared with the S&P 500’s 17.75X and the sector’s 11.69X.
Over the past five years, the industry has traded as high as 16.19X, as low as 6.26X and at the median of 7.85X, as the chart below shows.
EV/EBITDA Ratio (TTM)
3 Cable Stocks to Watch
Cable One: The company presents a compelling turnaround opportunity despite the second quarter's $438 million net loss due to non-cash impairment charges. The company demonstrated sequential revenue improvement with residential broadband revenues increasing 1.9% quarter over quarter, driven by a $2.39 ARPU increase to industry-leading levels. Strategic initiatives, including billing system migration completion, will generate $15 million in annual cost savings starting late 2025, while new value-added services and a mobile pilot program aim to enhance customer lifetime value. With $70.8 million in debt repaid during the second quarter and a strong liquidity position of $1.02 billion, Cable One's disciplined capital allocation and operational improvements position it well for sustainable growth as competitive headwinds subside and new product initiatives gain traction.
Shares of this Zacks Rank #2 (Buy) company have lost 55.4% year to date. The Zacks Consensus Estimate for CABO’s third-quarter 2025 earnings has moved north by 6.7% to $9.25 per share in 30 days. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Price and Consensus: CABO
Comcast: The company merits investor attention in 2025 following a solid second-quarter performance that demonstrated operational resilience despite industry headwinds. The company delivered 3% adjusted EPS growth and generated robust $4.5 billion in free cash flow, while its wireless business achieved record quarterly additions of 378,000 lines, showcasing convergence advantages. Theme parks revenues surged 19% with Epic Universe's successful launch, and Peacock improved profitability with 18% revenue growth and narrowed losses. The strategic Versant spinoff, expected by year-end, will unlock value by separating legacy cable assets worth $7 billion annually, allowing focused capital allocation toward higher-growth streaming and connectivity businesses. While broadband subscriber losses persist, management's go-to-market pivot shows early promise, positioning Comcast for improved performance as strategic initiatives mature.
Shares of this Zacks Rank #3 (Hold) company have lost 9.5% year to date. The Zacks Consensus Estimate for Comcast’s third-quarter 2025 earnings has moved south by 4.3% to $1.10 per share in 30 days.
Price and Consensus: CMCSA
Charter Communications: This Zacks Rank #3 company merits close investor attention in 2025 despite second-quarter challenges that triggered an 18% stock decline. While the company lost 117,000 Internet customers and faced subscriber headwinds, several catalysts position it for recovery. The transformative $34.5 billion Cox acquisition, approved by 99% of shareholders, creates America's largest cable operator with enhanced scale and $500 million in projected annual synergies. Charter's mobile momentum remains robust, with 500,000 net additions and 24.9% revenue growth, strengthened by the strategic T-Mobile partnership for business services, which is set to launch in 2026. Despite near-term pressures from competitive dynamics and the ACP subsidy expiration, Charter's infrastructure investments, improving video trends, and diversification into high-growth wireless markets provide compelling upside potential for patient investors navigating the evolving broadband landscape.
Charter’s shares have declined 22.5% year to date. The consensus mark for third-quarter 2025 earnings has moved north by 0.1% in the past 30 days to $9.61 per share.
Price and Consensus: CHTR