Moody's Cable Is Steady In 2013

HSD, Commercial Services Will Drive Growth
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Debt rating agency Moody’s Investor’s Service sees stable growth ahead for the U.S. cable, with high-speed Internet and commercial services driving the bulk of growth, according to a recent report.

In its annual Industry Outlook released Thursday, Moody’s anticipates cash flow growth in the sector will rise a modest 3% in 2013, the same level as 2012 and reflecting market saturation and competition.

Moody’s lead analyst Karen Berckman, the author of the report, also predicted basic video customers losses will slow in 2013 as the segment reaches equilibrium. Cable operators currently control a little more than half of the pay TV market – with DBS accounting for 35% and telcos 15%, Moody’s said – and those rates should hold in the coming year.

Cable companies have managed to reduce basic video customer losses for five straight quarters.

“We expect this moderation to continue through 2013,” Berckman wrote.

While high-speed data additions have slowed as that segment matures, Berckman expects cable companies to gain market share. In the report she notes that cable companies should increase their broadband penetration to 39% of homes passed in 2013 – up from 37% in 2012 and 30% in 2008. The analyst also expects cable to capture about 60% of U.S. high-speed data additions, in line with historical trends.

Commercial services also are expected to continue their upward trajectory, with cable operators averaging about 20% growth in the segment for the year. Berckman predicted that cable operators may look to acquisitions to beef up their commercial services offerings. And though cable has had great success in the small-to-medium sized business segment, larger operators may begin dipping their toes in bigger commercial accounts in the coming year.

 “We see the larger cable operators gradually moving toward the large-customer segment as they gain experience and competency within the business segment, but we don’t expect their offerings will become viable alternatives for the largest global companies like General Motors Co., Wal-Mart Stores Inc. and Pfizer Inc. for year,” Berckman wrote.