The uptick in media stocks is due in part to the fact that Netflix has become a profit center for the industry, David Bank, managing director of Global Media and Internet Research at RBC Capital Markets, told CNBC Thursday.
"People were really terrified about the concept of cord cutting [customers opting to get rid of their cable box and instead watching television and movies via the Internet]," Bank said. "The concept that Netflix was going to take away the traditional media viewer, wreck the existing echo system."
But as it turns out the major media conglomerates have been "a lot more friend then enemy," he added. Netflix has largely been a "fantastic, incredibly, highly-profitable source of funds for all those conglomerates—between $100 and $200 million dollars a year of cash coming in and they really haven't cannibalized an audience."
Bank went on to day that Home Box Office has the best opportunity to go up against Netflix"in terms of the ability to go over-the-top at some point themselves with a real hefty programming budget and programming that's in demand."
In addition, a significant revenue stream for the Viacom's and CBS's of the world is retransmission, which is the ability ultimately to get paid by your cable operators for sending out broadcast signal.
"What you're going to see over the next five or so years is a ramp up in affiliate fees for those broadcast networks for the stations that they own probably starting at 50, 60-cents a sub up to a dollar and probably north of that," explained Bank.
"Historically there were two camps in television, one were the cable network guys who had a dual stream revenue of advertising and affiliate fees. And the other were the broadcasters who relied solely on advertising," he concluded.
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