Wall Street Crisis And The Cable "Connection"
The volatility on Wall Street this 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 CFO Michael Angelakis presented an attitude of optimism at this 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, 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 and Charter Communications 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).
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.
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