One of the US’s major media research analysts has downgraded three major cable stocks and expressed anxiety about the threat of tough regulations on the sector, and in effect is applying its own ‘cord-cutting’ on the cable sector generally.
Craig Moffett from MoffettNathanson downgraded Comcast, Time Warner Cable and Charter Communications to ‘Neutral’ saying it was time to reduce exposure.
Moffett praised US cable’s recent progress saying that cable stocks have been extraordinary good investments and “breeding a measure of loyalty among many investors who have enjoyed the ride”.
He cites Charter’s 131 percentage points growth over the market overall since 2011, and 64 percentage points at Comcast and 47 percentage points at Time Warner.
But overall, Moffett is worried about price regulations coming into play “especially …when viewed in the context of the FCCs repeated findings that the broadband market is non-competitive” and the threats from tough Title II regulations being applied.
As well as cutting back on its recommendations, MoffettNathanson also expresses worries over continued actual ‘cord-cutting’ by US consumers. The analysts admit that evidence is “sorely lacking” as to the extent of cord cutting, and suggests that after 4 quarters when growth “crawled back” to zero, it is anxious that cord cutting has begun to “accelerate a bit” and could not be helped by the growing number of players entering the OTT market.
MoffettNathanson cites the “hundreds of thousands” of applicants for Dish’s SlingTV service, and also talks about new service introductions from Sony, HBO, CBS as well as promised OTT introductions from Nickelodeon and Showtime. Craig Moffett says this steady “drip, drip, drip” of cord cutting bad news is not helping Americans who are increasingly not participating in the traditional pay-TV ecosystem.