Steve Mehs
11-04-02, 04:19 AM
The multichannel TV market is maturing, which means the competitive differentiation between satellite TV and cable is diminishing and growth is becoming more illusive, according to a report from Salomon Smith Barney satellite analyst Armand Musey.
Still, while competition is increasing between the wire and the dish, Musey said he believes DBS growth will continue to outpace cable. DBS has lower churn, increased penetration in unserved areas, and lower-priced offerings to thank for continued growth at the expense of cable, he said.
Musey estimated that out of 105 million U.S. households, about 69 million to 70 million are cable subscribers, up from 59 million when DBS was introduced in 1994. Another 19 million are satellite TV subscribers, implying total market penetration for multichannel services of roughly 85 percent. Musey also said he believes true DBS penetration is underestimated by 5 percent to 10 percent due to piracy, implying that total market penetration for pay-TV services is closer to 90 percent or 95 percent.
"In any case, it is clear that we are reaching a point where growth is becoming a zero-sum game, whereby cable and DBS are slugging it out trying to grow by pulling subscribers away from one another, which is having a negative impact on SAC, churn, and ARPU for both DBS and cable companies," Musey said in his research note.
Meanwhile, in a separate note, Musey downgraded EchoStar stock, but maintained his $21 target price on the shares. The analyst said that at current price levels, Hughes shares are more attractive than DISH.
From SkyReport (http://www.skyreport.com/skyreport/nov2002/110402.shtm#two) (Used with Permission)
Still, while competition is increasing between the wire and the dish, Musey said he believes DBS growth will continue to outpace cable. DBS has lower churn, increased penetration in unserved areas, and lower-priced offerings to thank for continued growth at the expense of cable, he said.
Musey estimated that out of 105 million U.S. households, about 69 million to 70 million are cable subscribers, up from 59 million when DBS was introduced in 1994. Another 19 million are satellite TV subscribers, implying total market penetration for multichannel services of roughly 85 percent. Musey also said he believes true DBS penetration is underestimated by 5 percent to 10 percent due to piracy, implying that total market penetration for pay-TV services is closer to 90 percent or 95 percent.
"In any case, it is clear that we are reaching a point where growth is becoming a zero-sum game, whereby cable and DBS are slugging it out trying to grow by pulling subscribers away from one another, which is having a negative impact on SAC, churn, and ARPU for both DBS and cable companies," Musey said in his research note.
Meanwhile, in a separate note, Musey downgraded EchoStar stock, but maintained his $21 target price on the shares. The analyst said that at current price levels, Hughes shares are more attractive than DISH.
From SkyReport (http://www.skyreport.com/skyreport/nov2002/110402.shtm#two) (Used with Permission)