Analyst: Q4 Looks The Same


Collins Stewart media analyst Tom Eagan issued his fourth-quarter forecast for the cable industry and said investors should expect many of the trends that emerged in the previous period to continue.

Third-quarter results were generally in line with his estimates, with an equal helping of the underwhelming (DirecTV's 156,000 net subscriber additions, below estimates) and some surprises (Cablevision's 14% cash-flow growth and Comcast's 77% increase in free cash flow).

For the fourth quarter, Eagan suspected that he may be too conservative in his cash-flow growth estimate for Cablevision Systems (7.3%) and his prediction that Comcast will lose 90,000 basic customers in the period may be a bit too optimistic. Eagan lowered his basic subscriber-loss estimate from 10,000 to 20,000 in the quarter for Time Warner Cable, primarily because the company said it was seeing a downward growth trend in the early part of the period.

At satellite-TV provider DirecTV, Eagan believes that fourth-quarter subscriber growth could outpace the sector — his 215,000 basic-subscriber addition estimate is in line with the company's. At Dish Network, which has been having a rough time with two straight quarters of customer losses, Eagan estimates that subscriber numbers could rise in the fourth quarter, before declining in 2009. For 2009, Eagan lowered his estimates from a net gain of 17,000 customers to a loss of 100,000 subscribers.