Analyst: Pay TV Subscriber Growth to Pick Up 'Modestly' in 2012
Barclays Capital's James Ratcliffe says that fourth-quarter results once again showed that "weak occupied home growth, not cord cutting" has kept growth in check.
NEW YORK - Pay TV subscriber growth will pick up "modestly" this year driven by a "modest improvement in housing occupancy, along with the expansion of lower-priced plans targeted at more price-sensitive customers," Barclays Capital analyst James Ratcliffe said on Friday.
In a report entitled "Cable/Digital Broadcast Satellite Businesses Are Healthy, Even With Tough Housing Environment," he predicted that cable, satellite TV and telecom companies would add 450,000 pay TV subscribers in 2012, up from 195,000 last year.
He echoed other experts who recently told The Hollywood Reporter that the improved fourth-quarter subscriber trends should give investors concerned about potential cord cutting confidence.
"Housing weakness explains sluggish pay TV results," Ratcliffe wrote. "Fourth-quarter results again showed that weak occupied home growth, not cord cutting, has kept pay TV subscriber results in check. The growth in homes without pay TV actually slowed year-over-year in 2011, as pay TV net adds declined from 270,000 to 195,000, while occupied home growth slowed from 940,000 to 660,000."
The analyst has "equal weight" ratings on cable giant Comcast and Dish Network, but fellow satellite TV provider DirecTV gets an "overweight" rating from him. He pushed the target prices on all the stocks higher following the strong fourth-quarter performance.
"We continue to find DirecTV shares attractive, and fourth-quarter commentary makes us incrementally more positive about the near-term prospects of the company's U.S. business and strategy," he said. "Continued aggressive share buybacks provide additional support for the shares."