trending Market Intelligence /marketintelligence/en/news-insights/trending/jJ_U1mX_7ikkZOXQGFXUrQ2 content
Log in to other products

Login to Market Intelligence Platform

 /


Looking for more?

Contact Us

Request a Demo

You're one step closer to unlocking our suite of comprehensive and robust tools.

Fill out the form so we can connect you to the right person.

If your company has a current subscription with S&P Global Market Intelligence, you can register as a new user for access to the platform(s) covered by your license at Market Intelligence platform or S&P Capital IQ.

  • First Name*
  • Last Name*
  • Business Email *
  • Phone *
  • Company Name *
  • City *
  • We generated a verification code for you

  • Enter verification Code here*

* Required

Thank you for your interest in S&P Global Market Intelligence! We noticed you've identified yourself as a student. Through existing partnerships with academic institutions around the globe, it's likely you already have access to our resources. Please contact your professors, library, or administrative staff to receive your student login.

At this time we are unable to offer free trials or product demonstrations directly to students. If you discover that our solutions are not available to you, we encourage you to advocate at your university for a best-in-class learning experience that will help you long after you've completed your degree. We apologize for any inconvenience this may cause.

In This List

Cable analysts see Q3 margins expanding as US broadband subs grow

Pandemic to propel rise of mobile payments in India's 781B point of sale market

Belarus: Pay TV, Broadband Market Overview

Global Operators Expand Integrated Access To OTT Services

European And U.S. Children Are Growing Up On SVOD TV Programming


Cable analysts see Q3 margins expanding as US broadband subs grow

While cable operators are expected to continue losing video subscribers, analysts still expect a strong third quarter for margins at large U.S. cable companies as a broadband-first strategy continues to drive gains.

MoffettNathanson pay TV analyst Craig Moffett said in a research report this month that cable margin expectations are too low across the board and that video losses could help drive margins higher.

"The idea that [EBITDA] cable margins could climb as high as 50% shouldn't be viewed skeptically," wrote Moffett, noting that as video fades as a percentage of revenue, the cable business gets closer to being purely a telecommunications business.

"There are plenty of examples of telecom businesses with margins in the 50% range (Verizon Wireless, to cite just one example, has margins of nearly 70%, and that's in a four player wireless market that is structurally far more competitive than cable)," he said.

As cable operators de-emphasize video, Moffett believes that bundled discounts for broadband will be "increasingly unwound," raising broadband average revenue per user numbers. Additionally, he said because video is more service-intensive than broadband, a continued decline in video subscribers lowers nonprogramming costs as a percentage of revenue, which "boosts aggregate margins."

Moffett also noted that as cable operators accept the idea that some cord cutting is acceptable, they will offer fewer "irrational save offers" to customers threatening to leave, which removes another source of pressure on video margins.

Philip Cusick, a managing director at J.P. Morgan covering U.S. telecommunications services, projects a record loss of 1.92 million video subscribers across the legacy video ecosystem for the third quarter. This number excludes virtual multichannel video programming distributors.

While the majority of the projected losses come from continued pressure from the expiration of a price-lock promotion at AT&T Inc., Cusick believes video losses could represent the highest level of losses for operators since the third quarter of 2013, as Comcast Corp. and Charter Communications Inc. "continue to de-emphasize low-end video offers in favor of a connectivity-centric strategy."

Cusick also highlighted rising programming costs, more blackouts and a growing list of alternative video services as contributing factors to mounting video subscriber losses across the video ecosystem.

When it comes to broadband subscribers, Cusick sees improvement in year-over-year subscriber numbers, citing an expectation that gross additions and retention will improve, especially across the legacy Time Warner Cable Inc. footprint, which Charter acquired in 2016.

Citing planned video rate increases by Charter in the fourth quarter of 2019, The Benchmark Co. media and entertainment analyst Matthew Harrigan said Charter's move simply reflects an evolving pricing environment "that better optimizes profitability and recognizes the reality of programming cost increases."

Harrigan also expects Charter to benefit from marketing new streaming products from Apple Inc. and The Walt Disney Co., either by including them in overall video and broadband packages or through individual product marketing.

Turning to Comcast, Jeffrey Wlodarczak, Pivotal Research Group principal and senior analyst of entertainment and interactive subscription services, wrote in an October research report that he views the set up of the stock for the balance of 2019 and 2020 as attractive.

Overall, he expects "likely continued solid data results" from Comcast due to subscriber and ARPU growth.

SNL Image