Analyst sees relatively stable cable business


Wells Fargo SecuritiesAccording to Wells Fargo analyst Marci Ryvicker, cable operators are moving to develop and deploy previously announced initiatives, are happy about upfront sales and think that the contentiousness of retransmission negotiations are starting to pick up.

On the retrans front, Ryvicker noted that some operators say the process was the worst it’s ever been. “We think this is a direct result of reverse comp, which is the programming fee the broadcast networks now require from the station groups,” she said. “It does not sound like this dynamic will change anytime soon, as regulators remain relatively hands-off with the exception of shared service agreements, which are currently under review via an NPRM at the FCC.”

She noted that the industry is pinning hopes for growth on continuing to expand the number of services offered, with Comcast credited with leading the way, offering things like Skype and home security applications.

She noted that internet-delivered video is facing a lot of obstacles and is not seen as something that will become a major factor in the business in the immediate future – on problem is it cuts off cable operators’ local advertising.

The maturity of satellite competitors is said to have removed their “next new thing” polish, a conjecture which some smaller operators have said is making it easier to compete with them.
Ryvicker noted that the body language they were seeing on upfront was very positive.

RBR-TVBR observation: The business models in play now are light years removed from what they used to be and still evolving. We would point out that although it is the oldest of the players in the video universe, broadcast remains the strongest.

It is the unchallenged leader in the provision of local content, provides the strongest programming lineup week in and week out, is still the best venue when it comes to delivering a mass audience, and is a critical part of the national infrastructure when it comes to providing the public with emergency news and information.

For all of these reasons, it is in the national interest that it remain strong and in robust financial health, and it is also in the interest of MVPDs to have strong and healthy broadcast partners, since broadcasters are one of the main reasons consumers subscribe to MVPDs in the first place.
As legislators and regulators become more and more tempted to insert themselves into this process, we hope they will keep this in mind.