Business Gets 'Tougher’ for DirecTV
by Linda Moss -- Multichannel News, 4/27/2008 8:00:00 PM
With the impact of the mortgage crisis and the loss of BellSouth’s former territory, business will get much “tougher” for DirecTV in the second quarter, according to a Wall Street analyst.
Sanford C. Bernstein analyst Craig Moffett last week downgraded DirecTV’s stock to a “market perform” from “outperform,” and said he was shifting his preference to Dish Network.
Moffett noted that DirecTV has seen its stock price rise as HDTV penetration has increased. The nation’s largest satellite provider has vastly expanded its high-definition lineup this year. But DirecTV’s HD advantage won’t be as beneficial in the second quarter, he said.
“Traditionally, 70% of HDTVs are sold during the four months from September (at the start of the football season) and February (the Super Bowl),” he said. “Service providers tend to follow the same HDTV rhythm.”
The mortgage debacle will also hurt DirecTV, Moffett wrote: “With the mortgage market still in deep freeze, housing velocity has slowed to a crawl and gross additions have already plummeted.”
Third and most important, Moffett said, AT&T has stopped bundling and reselling DirecTV service in BellSouth’s former territory, instead offering Dish Network.
“While well-telegraphed, the April 1st switch to Dish Network will have a significant impact on net additions,” Moffett wrote.
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