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Cut the Cord and Invest the Difference

Regular Fool.ca readers might be aware of my aversion to Bombardier, Inc., a company that can barely stand on its own two feet without the aid of government handouts keeping the lights on.

I’m not a fan of corporate welfare.

Equally appalling to me are the cable companies in this country, which hide behind a toothless CRTC that just can’t seem to get its act together long enough to tell Rogers Communications Inc. (TSX:RCI.B)(NYSE:RCI) and the rest of the oligopolies to take their 19th century version of customer service and stuff it.

The current CRTC hearings into the so-called skinny basic TV packages that cable providers were forced to start offering customers as of March 1, 2016, have been a sham. CRTC chairman Pierre Blais has done his best to appear concerned about the Canadian consumers’ poor treatment at the hands of the cable operators, but in the end, we all know nothing will come of our protests.

Money talks, and you know what … it walks.

Okay, enough of my political rant. Let me get to the point.

There used to be a saying that you should invest in a mutual fund company’s stock rather than its products—the rationale being that you’d end up much farther ahead because the stock would do better, performance-wise, than the mutual funds they were hawking.

CI Financial Corp. (TSX:CIX) has generated a five-year annualized total return of 8.7%, 500 basis points greater than the CI Harbour Fund, CI’s biggest mutual fund with $1.9 billion in assets under management.

Turning to the cable providers—or should I say “bundle” providers—the principle isn’t exactly the same, but I think you get the idea behind it.

You’re much better off investing in the stocks of Rogers, BCE Inc. (TSX:BCE)(NYSE:BCE), or Telus Corporation (TSX:T)(NYSE:TU) than you are using their products and services. Even when they’re asked to create a basic TV package, they load the offer with all kinds of conditions to the point where the offer doesn’t remotely resemble what the CRTC was looking for.

Bell says it will have a “standalone” bundle-free package by March 2017, exactly one year after being required to do so. These companies are famous for pushing the ball farther down the road, so they don’t immediately have to deal with the problems in the hopes that they’ll simply go away or a better plan will present itself.

For years we were told that accumulated losses at the cable companies were the result of huge infrastructure investments that would ultimately pay dividends, and to a certain extent, they have—but not without the Canadian consumer being completely hosed.

Over the past five years, shareholders of Rogers, BCE and Telus together have achieved an annualized total return of 11.5%, 527 basis points higher than the S&P/TSX Composite Index. If you’d invested $1,000 in each, today you’d have $5,170—a profit of $2,170, or about $36 per month.

While that wouldn’t cover what I pay Rogers and Bell each month by a long shot, it would have made a bit of a dent.

However, I’ve got a better solution.

Stop watching TV, get rid of your home phone, and invest the difference in their stocks. If history repeats itself, you’ll do just fine.

Whether you can live with yourself—it’s akin to investing in the cigarette companies—is your cross to bear.

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Fool contributor Will Ashworth has no position in any stocks mentioned. The Motley Fool owns shares of ROGERS COMMUNICATIONS INC. CL B NV. Rogers Communications is a recommendation of Stock Advisor Canada.

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