The Bottom Line

Unplugged

Now the cable companies find themselves going into 2006 besieged on all sides. Verizon and SBC, their backs to the wall, their wireless build-out almost finished, are plowing billions into providing you with low-cost packages for phones, Internet, and video. DirecTV, aided by its new largest shareholder, Rupert Murdoch of Fox, can offer below-market rates for dishes, confident it can make it up in advertising on the back end. With no new properties to buy—there’s virtually nothing left once the Adelphia carcass gets split up between Time Warner and Comcast—and no new features to give away, the cable companies can’t grow inside or outside their territories. They have become shrinking, wounded hulks, just another set of players grasping for the consumers’ attention.

For $1.99, you can download ‘Desperate Housewives’ to your video iPod and envision a world without cable.

How do you play this? I think you have to dump the cable companies, every last one of them. Comcast, in particular, seems vulnerable to further downside, as it is the least advanced in its phone offerings and is still acting monopolistic in its home markets.

Not that I want to buy the phone companies, the dish companies, or the networks. Everyone involved in this dogfight is struggling to preserve a status quo that seems to vanish by the day. The only winners?

The arms merchants themselves, the technology companies that stand to gain from the orders that all of these companies have to place to stay on top: chip- makers Broadcom and Qualcomm, and, of course, Apple, the pioneer with the momentum.

Oh yeah, there’s another winner I forgot: you! Your bills for televised entertainment will never again be as high as they were in the cable monopolists’ heyday. Competition: It’s a wonderful thing.

James J. Cramer is co-founder of TheStreet.com. He often buys and sells securities that are the subject of his columns and articles, both before and after they are published, and the positions he takes may change at any time. At the time of this writing, he owned Qualcomm.
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