Wall Street Analyst Refutes FCC Chairman’s Cable Math
Moffet Says 70% Cable Penetration Not ‘Mathematically Possible’
By Ted Hearn -- Multichannel News, 11/25/2007 6:35:00 PM
Washington – Wall Street cable analyst Craig Moffett told a Federal Communications Commission official last week that it was not “mathematically possible” that cable penetration of U.S. households is 70% or higher.
Moffett, a cable analyst at Sanford C. Bernstein & Co., provided his analysis in a Nov. 21 letter to FCC Democrat Jonathan Adelstein. Adelstein became the third FCC member to seek outside data after FCC chairman Kevin Martin infuriated the cable establishment by declaring that cable TV operators had breached the 70% barrier, triggering a legal provision that gives the FCC expansive new powers to regulate cable.
Moffett, based on a review of Securities and Exchange Commission filings and other publicly available data, concluded there are 63.5 million U.S. cable subscribers, which means the total number of homes passed would have to be 90.7 million or fewer to achieve 70% penetration.
But, Moffett said, such a result could not be possible because “the eight publicly traded cable companies” alone have reported passing 94.2 million homes. The eight MSOs have 48.4 million subscribers.
After looking at the total number of cable subscribers and the total number of homes passed by all cable companies, and after adjusting to exclude vacant households, Moffett determined that cable penetration was no higher than 60.5%.
“We do not believe that it is mathematically possible … to arrive at cable adoption rates materially in excess of 60%,” Moffett told Adelstein.
On Tuesday, the FCC is scheduled to vote to approve the agency’s annual report to Congress on video competition. Martin ordered FCC staff in the Media Bureau to include the 70% finding in the report. A majority of FCC members has sought outside data to verify Martin’s claims.
The FCC gets a booster shot of power over cable when 70% of households are passed by a cable system with at least 36 channels — and 70% of those households, in turn, subscribe to such cable systems.
Martin’s sole authority for putting cable penetration at 71.4% is the Television & Cable Factbook, published annually by Warren Communications News. Warren has said its data were accurate but not reliable because some cable operators withheld their subscriber and homes-passed totals.
