According to Wells Fargo analyst Marci Ryvicker, there will be four overriding themes as cable and satellite video services discuss their Q4 results and outlook for 2013. They include costs, prices, and acts of nature.
The four areas are expected to impact revenue results and stock performance. Specifically, they are 1) 2013 guidance in general and program expense in particular; 2) commentary on price increases; 3) announcement on return on capital; and 4) the effects of Hurricane Sandy.
Here is how Ryvicker broke the four “themes” for the first round of conference calls in 2013:
* KEY THEME NO. 1: GUIDANCE AND SPECIFICALLY PROGRAMMING COSTS. Q4 is when we tend to hear management’s outlook for the next fiscal year. Of all line items, we deem programming costs as most important given the myriad of deals signed within the past 6-12 months. Of our companies, we expect the greatest yr/yr programming expense growth from DTV US, followed by CMCSA, DISH, CVC and TWC.
* KEY THEME NO. 2: PRICE INCREASES. The best way to manage rising programming costs is through price increases. We think the best way to gauge this metric is to look at pay-TV revenue growth rather than ARPU (given that this is an internal allocation). Of our companies, we expect the greatest yr/yr growth in revenue from DISH, followed by DTV US, CMCSA, TWC and CVC.
* KEY THEME NO. 3: CAPITAL RETURNS. Of the three companies expected to announced incremental capital returns (CMCSA, TWC and DTV), we think CMCSA will have the greatest acceleration from last year, as TWC and DTV are pursuing potential transactions and are approaching their target leverage ratios.
* KEY THEME NO. 4: HURRICANE SANDY. For the most part, Hurricane Sandy was isolated to Q4, but CVC is most likely to feel the impact a bit longer than the others, which should not be a surprise to the Street. At this point, we think investors will give a pass to any operational or financial “misses” this Q4.