CES 2012: Wall Street Analysts Pick Winners

Charlie Ergen - House Hearing - 2001
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Wells Fargo likes what it saw from cable operators and Charlie Ergen's Dish, while Wunderlich Securities saw a continued tablet focus as positive for cable network owners.

NEW YORK - Who are the winners of CES 2012? Wall Street analysts said Friday that they liked what they saw from cable operators, particularly Time Warner Cable, satellite TV firm Dish Network and cable networks owners.

"We just attended the Consumer Electronics Show (CES) in Las Vegas, where we met with a variety of programmers, distributors, vendors and so-called "disruptors" to gauge the current state of the TV ecosystem," wrote Wells Fargo analyst Marci Ryvicker. "We come away incrementally positive on cable (specifically Time Warner Cable) and Dish."

Among the good news for cable operators: TV Everywhere is gaining momentum. Said Ryvicker: "Currently TV Everywhere is a retention tool more so than a revenue generator (recall that TV Everywhere is offered to an authenticated video subscriber at no additional charge). However, long-term focus is on incremental revenue and those we spoke with believe the business model will be ad based versus subscription based."

While there are a few "disruptor" startups that believe that the future of TV is an a la carte model, "none could describe a reasonable path to monetization," the analyst explained. Her conclusion: "We view these players as "noise"…TV Everywhere is gaining steam, which could alleviate sub losses in the near to medium term."

With Ryvicker feeling "more positive on cable's position" in a changing TV landscape, "TW Cable had the greatest presence…We view this as a positive change suggesting that TW Cable is on a faster pace of innovation than previously thought."

She also liked that Dish showcased various tech innovations. "Most interesting to us is Dish Broadband, a Dish-branded high-speed data service," with which Charlie Ergen's company is targeting 10 million underserved or unserved U.S. households, Ryvicker said. "Bottom line: Dish comes out swinging, and we feel good about its relevance longer term," she said.

Wunderlich Securities analyst Matthew Harrigan also issued a couple of CES reports Friday.

"We remain positive on entertainment and cable network stocks continuing into 2012, with momentum off the spate of year-end 2011 deals and Jan. 2012 Consumer Electronic Show announcements, suggesting that advertising and affiliate pricing integrity will be preserved with the advent of mobile video and disciplined over-the-top models," he said.

A recent Comcast deal with Walt Disney (link) "in particular supports the notion that the integrated network studios will monetize authenticated broadband" distribution, he said.

Beyond the iPad, CES showed a continuing "onslaught of Android tablets with Windows 8 tablets also in the queue," Harrigan highlighted. "With tablet penetration already at 11 percent in the U.S. and the rabid popularity of HBO Go and other TV Everywhere services, episode viewing by authenticated users is a nice positive for networks and studios even as measurement and monetization develop."

Email: Georg.Szalai@thr.com

Twitter: @georgszalai