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Change is accelerating in the broadcast cable industry, as concepts such as the information superhighway continue to be redefined. The change creates opportunities but also carries great risks for potential investors. Investors should thoroughly educate themselves with sometimes hard-to-find information on the segments they are considering before spending their money. There are many timely options in the industry.

Ratings rose for cable TV and fell for broadcast TV during 1995, due to the departure of older viewers and rejection of new shows by younger viewers in the broadcast field. The media industry is still consolidating, although the effects of this are unforeseen. Earnings for the industry for the next three to five years are unpredictable, but there are some short-term trading opportunities for merger-related stocks.

Acquisitions, mergers, and consolidation continue to dominate the broadcast and cable TV industries. Time Warner is acquiring Turner Broadcasting, CBS Inc is being acquired by Westinghouse, and Capital Cities ABC Inc is being purchased by the Disney Co. These mergers may not make business sense, but they are good for shareholders of the acquired companies. This industry has opportunities for the intelligent investor.

Strong demand for advertising time in commercial TV for 1995-1996 is helping earnings in this industry. Both cable and commercial broadcasters will also be providing appealing programming for the 1995-96 broadcast year. Agreements within the industry concerning the information highway and other topics, however, are what investors pay attention to. Investors seeking income should look elsewhere, but there are investment opportunities here.

The information superhighway, the fiber-optic interactive cable system, is the major investment problem for the TV and cable broadcasting industries. Consumers who do not wish to pay more for extra services, along with audience segmentation, will impact earnings of cable providers. Turner, Viacom, and other broadcasters who provide basic programming have the most favorable future for shares in this industry.

Investors looking to invest in media stocks will find much competition among companies aiming to eventually offer their customers similar services. Cable firms are laying fiber optic to offer interactive services, as well as 500 channels of television programming. Telephone companies have more financial clout and will soon join the competition, along with direct broadcast satellite systems. Customer demand for so much television programming remains doubtful, so these firms may fare better over the long term.