Verizon (VZ) now has the right to sell cable TV service in New York City via its super-fast “FiOS” fibre optic network. Bad news for Time Warner Cable, which has had a near-monopoly on much of NYC for eons.
New York City only makes up about 10% of Time Warner Cable’s (TWC) subscriber base, but NYC subscribers spend “well-above average” per month on service, notes Pali Research analyst Rich Greenfield, who cut TWC to “sell” today.
Besides dealing with Verizon’s land grab, Time Warner Cable will likely have to compete by cutting prices, Greenfield notes. In NYC, Verizon will offer its typical “triple-play” package of cable TV, high-speed Internet access, and phone service for $99.99 per month, with a $69.99 introductory rate for the first six months. In Manhattan, Greenfield notes, TWC’s cheapest comparable plan for current customers is $119.95 per month.
Ignoring activation costs and taxes, Verizon’s bundle comes in some $515 cheaper over a 24-month period — though Greenfield notes that you can get a discount of $7-$30/month just by telling TWC you’re considering switching.
Meanwhile, Greenfield cut his 2009 EPS estimate to $1.11 from $1.21 — well below the Street’s $1.37 consensus. Time Warner Cable shares are down 2.9% to $27.10.
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