Loading...
Symbols:
Authors:

Wall Street Crisis and the "Cable Connection"

by: Julia Boorstin September 22, 2008 | about stocks: CHTR / CMCSA / CVC / TWC    

Julia Boorstin

About this author:
Become a Contributor Submit an Article
  • Font Size:
  • Print

The volatility on Wall Street last week sent cable and satellite TV stocks down through the week, recovering a bit in Friday trading.

What's the connection? When consumer spending pulls back and when the housing market slows, the cable and satellite businesses usually suffer as fewer people sign up for high-end new cable TV services.

But cable giant Comcast's (CMCSA) CFO Michael Angelakis presented an attitude of optimism at last week's Goldman Sachs Communacopia media and entertainment conference. He acknowledged markets look "scary" and said Comcast is "very concerned about ripple effects" in consumer markets. But he insisted "we have a defensive, resilient business that can take some body blows."

But the industry isn't worried about customers canceling their premium subscriptions -- people will stay home and watch ESPN if they're watching their wallet. And perhaps most importantly, cable has a whole new revenue stream in the works. Cable operators, led by Cablevision (CVC) , are moving towards offering a DVR service without a traditional DVR box, instead storing info on a remote network.

Cablevision is rolling out its service in early 2009, Comcast Time Warner Cable (TWC) and Charter Communications (CHTR) are expected to follow down the line. This new service is expected to be more convenient in that customers wouldn't have to have an additional box, nor would they have to sign up for a service through a separate company (like TiVo (TIVO)).

Cablevision says this new service that would save shows on Cablevision's servers could save the company more than $700 million and that it would no longer have to deal with pricey boxes or installation.

Cablevision just releasing key details of its new system Friday, saying the price will be around $9.95 a month. Sanford Bernstein's cable industry analyst Craig Moffett says the shift could boost DVR usage around 60 percent, which is pretty huge.

Related Articles

This article has 2 comments:

  •  
    Sep 22 08:40 AM
    The author makes no attempt to analyze the debt of these companies. The global banking crisis revolves around over leveraged debt being unwound. The Dolan family recently took their cable company private. This did not adversely impact the bonds of the company in any severe manner. The bonds did decline but only marginally. TWC has all kinds of high yield debt floating out there. Some include derivatives linked to Merrill Lynch like "PYI". Their bonds are declining even as the treasury bonds have rallied dramatically. How does the global banking crisis affect these cable companies?
    Reply
  •  
    Sep 23 01:42 PM
    I agree with you regarding the debt loads. With the US economy seeming to be going down very slowly, consumer spending has to slow with it. I believe those x-tra household items will be paired first, one being cable television. The Cable's may have a consistent revenue stream with high speed internet, but other than that nothing else. Someone other than Charter (With $19 billion in debt) will crumble and have to sell off assets. Also, unless I am mistaken, U.S. cable companies just have U.S. market share and have no global presence. If this is not true, someone let me know.
    Reply
More Comments on CMCSA ยป
More by Julia Boorstin
Investment Resources
Money Managment
Research
Seeking Alpha provides these ads as a service to its leading contributors
Articles on related themes
Cable
Book Publishing
Diversified Media
Movie Distribution