Analysts Raise Questions About Cablevision's Paying for Users' Online Access to World Series

RBC's David Bank says it illustrates the value of broadcast network content

NEW YORK - Wall Street analysts overnight started discussing Cablevision's decision to pick up the tab of $10 for subscribers who want to see the World Series via given the cable operator couldn't reach a new retransmission agreement with News Corp./Fox in time. And some expressed surprise or pointed out certain inconsistencies.

BTIG analyst Richard Greenfield highlighted that the decision comes in the midst of a debate about whether consumers are starting to drop their cable and satellite TV subscriptions to instead watch TV content online. "One would never expect to see a cable company actively encouraging its consumers to watch live TV programming over the web without the need for a multichannel video subscription," Greenfield said.

"Given Cablevision's high triple play penetration and the hassle of switching, we suspect 1% or less of subscribers have churned to-date, but fear that number could grow meaningfully if the dispute continues," he also estimated.

Meanwhile, RBC Capital Markets analyst David Bank argued that the move to pay for the World Series online coverage "illustrates a very important data point in the fight for retransmission consent - the value of broadcast network programming."

Cablevision has said that Fox was looking for an incremental annual fee increase of about $80 million a year, or about $2 per subscriber per month. "Cablevision pushed back on this rate, yet, offers to subsidize subscribers by $10 per sub for the World Series on, at least for this month," he pointed out.

In another calculation, Bank estimated that about 5% of Cablevision's subscriber base, or around 150,000 users, may go for the offer. The total cost to Cablevision would then be $1.5 million. Spread across the company's 3 million subscribers, that would amount to 50 cents per user just for the World Series.

"Given the World Series comprises only about 13% of the week’s programming or 3% of the month, one could easily see how Cablevision is valuing Fox at a figure greater than $1 per sub," he concluded.

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