Steady, Steady: Services in Place, Cable Set for Year of Growth
At the risk of going out on a limb, we’re guessing this week’s MSO quarterly earnings results will be outshined by Adelphia’s auction (please see story below). Much of what major cable ops will report will be relatively low key, as most have already fleshed out key numbers (DVR adds, VoIP plans, etc), but guidance should play a major role. Ironically, first up are Comcast (Thurs) and Time Warner (Fri), expected to be key players in the Adelphia stakes and likely to be the busiest buyers in ’05. Comcast will name the initial 4-5 systems to receive its new VoIP service. VoIP will grow by a factor of 200K subs for Comcast in its 1st year of operation, Merrill Lynch analyst Jessica Reif Cohen predicts. TW made a similar showing last year. Speaking of VoIP, Cablevision hasn’t announced an earnings date, but MSO’s would do well to emulate its prowess, VoIP has been a "bona fide blockbuster hit" for CVC, Reif Cohen says. Consensus has CVC doubling VoIP penetration among basic subs from 9% to 21%, ending ’05 with 340K net adds, up from estimates of 275K. The market also will be watching what CVC does with its Rainbow nets, which Bernstein’s Craig Moffett says will be "the major factor" in CVC’s ’05 stock performance. There’s no indication CVC is considering selling the nets. As this is a comeback quarter, expect across-the-board jumps for CVC in digital, HSD, VoIP (where applicable) and even basic sub numbers. No MSO needs to stop bleeding basic subs more than Mediacom (Feb 24), which gets pounded by local-into-local DBS. MCCC may rescue itself with help from its new telephony bundle, due the 1st half of the year. Still, analysts see Mediacom continuing to slide, with basic sub losses likely to be 15K-20K in 4Q. As is true elsewhere, its digisubs and data subs will grow.