Investor Gabelli joins millennials cutting the cable cord

NEW YORK It is not just millennials looking to cut the cable television cord: famed 73-year old billionaire value investor Mario Gabelli is planning to make a similar move.

“I just got my bill for cable and it was outrageous,” Gabelli said at the Reuters Global Investment Summit in New York on Thursday. “So I’m going to start cutting.” Gabelli, chief executive officer of Rye, New York-based GAMCO Investors Inc, addressed the rapidly shifting landscape of the media, cable and technology industries.

More and more consumers – especially teenagers and younger adults known as the millennial generation – now prefer to watch TV and movies on demand on a variety of devices, and that change in habit is reshaping the way media creators and distributors do business.

“We do think there is going to be a lot of cord-cutting,” Gabelli said, referring to people dumping their pricey cable and satellite subscriptions in favor or smaller packages delivered by streaming video services. Gabelli said he dropped his subscription for satellite TV provider DirecTV as well.

As a result, he and other like-minded consumers will increasingly want high-speed broadband, said Gabelli. As that demand grows, he said big players such as Alphabet Inc (GOOGL.O) and Amazon.com Inc (AMZN.O) will have to pay more for their share of network traffic as they hog high-speed bandwidth.

“So who is going to maintain that highway and how are they going to get paid for it?,” Gabelli asked, referring to the cable operators and telecommunications companies which provide broadband services.

Cablevision Systems Corp (CVC.N) is one of the top holdings of the Gabelli Asset Fund (GABAX.O) and the Gabelli Value 25 Fund (GABVX.O), which Gabelli co-manages. The cable operator held by the Dolan family has agreed to sell it to Patrick Drahi’s Altice in deal valued at $17.7 billion.

Gabelli said he expects another round of consolidation in the cable industry, as well as in media in general. While Time Warner Inc (TWX.N), owner of premium cable network HBO, deflected a bid from Twenty-First Century Fox Inc (FOXA.O) last year, Gabelli expects Time Warner to be involved in a deal at some point. “Something is going to happen,” he said. “HBO is an extraordinary asset.”

(Reporting by Jessica Toonkel- Additional reporting by Jonathan Stempel- Editing by Bill Rigby)