Google Inc (GOOG), Intel Corporation (INTC), DIRECTV (DTV): NFL Sunday Ticket Could Change Hands

Obviously, even if Intel Corporation (NASDAQ:INTC)’s service is fantastic, it isn’t going to get 20 million subscribers overnight. But longer-term, paid TV could become a meaningful contributor to Intel’s business.

DIRECTV as a value trap
This overarching trend — the move to bring content online — should frighten DIRECTV shareholders. On paper, the company is a tremendous value: It trades with a below-market multiple, generates cash, and buys back stock aggressively. It’s even one of Warren Buffett’s picks.

Yet, the potential long-term ramifications of paid-TV’s move to the Internet could be catastrophic. Unlike a rival such as Comcast or Time Warner Cable, DIRECTV’s Internet offerings are largely non-existent. Thus, it’s extremely susceptible to Internet-based competition.

Should a Comcast TV subscriber ditch his cable package for Intel’s offering, Comcast would still retain that subscriber’s business for Internet access. DIRECTV, on the other hand, lacks that luxury.

DIRECTV (NASDAQ:DTV)’s management understands the threat. It tried to buy Hulu last quarter, and on the company’s last earnings call, said it was disappointed that Hulu’s owners wouldn’t sell. DIRECTV might’ve made Hulu into its own Internet-based service, but without it, the company remains vulnerable.

Content goes online
Should Google Inc (NASDAQ:GOOG) acquire the rights to NFL Sunday Ticket, it would be yet another example of the Internet becoming the preferred distribution method for content. YouTube is already a dominant video portal, but by pairing it with the NFL, Google could position itself as a major player in the digital TV world.

At the same time, while the loss of the NFL might be seen as a net positive for DIRECTV, the overarching trend is decisively negative. As it has no Internet offerings, DIRECTV is extremely susceptible to online-based competition, like the service Intel Corporation (NASDAQ:INTC) is preparing to launch in the near future. Overall, this trend remains in its infancy, but it’s something DIRECTV shareholders need to keep an eye on.

The article Another Sign the Internet Is Going to Kill DIRECTV originally appeared on Fool.com and is written by Sam Mattera.

Sam Mattera has no position in any stocks mentioned. The Motley Fool recommends DIRECTV, Google, and Intel. The Motley Fool owns shares of Google and Intel.

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