Madera Technology Partners – Is Cable Video A Commodity Business?

“In a commodity business, it’s very hard to be smarter than your dumbest competitor.” - Warren Buffett

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Psychology of fear

The current facility-based video (cable and satellite) market enjoys 30% EBITDA margins which we believe will quickly move toward commodity margins of 5% as substitute products with better technology from over-the-top (OTT) players force a price war. We believe this disruption presents a very attractive risk/reward opportunity for shorts within this space.

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Is Facility (Cable And Satellite) Video A Commodity Business?

A commodity is a good that is generally interchangeable with another of...