Sanford Bernstein cable and satellite analyst Craig Moffett foresees bad news for TV giants like Comcast (CMCSA), Cablevision (CVC), Time Warner Cable (TWC), and DirecTV (DTV): the depressed U.S. housing market will ding subscriber growth and likely lead to net subscriber losses this year and beyond.
- The cable industry as a whole will lose 222,000 net subscribers this year and 300,000 next year, versus 85,000 net additions last year.
- Comcast, the largest U.S. cable provider, will lose 85,000 net subs this year and 114,000 next, more than four times the 26,000 net sub losses Moffett previously projected for 2008.
- Satellite’s growth will slow from 1.9 million net ads last year to 1.4 million this year and 890,000 next year.
- Telcos like NY-based Verizon Communications (VZ) and AT&T (T) should continue to grow strongly off of a tiny base: Moffett projects that the telcos will add 790,000 net subs this year and 1.5 million next year, building on total TV subs of only 210,000. (The telcos will be affected by housing, too, presumably, but it won’t be as visible because they’re growing off of such a small base)
Some better news: these companies are massive, resistant to macro-economic shocks, and, in Moffett’s view, shouldn’t suffer much financially. While slower growth may spook investors, Moffett projects that the financial impacts of slower subscriber growth will be relatively modest, ranging from an average EBITDA reduction of 0.6% at Comcast and 0.4% at Time Warner Cable over the next two years.
And perhaps the best news of all: when analogue TV channels go off the air in February, 2009 (to make way for wireless services from the winners of next year’s FCC spectrum auction), some 20 million homes will need to replace rabbit ears with digital TV service. “For many of those households,” Moffett writes, “the most expedient answer will almost certainly be a call to the local cable operator, or to DirecTV or Echostar.”