Banc of America Securities cable analyst Doug Shapiro wrote in a report that despite upbeat presentations by cable operators at the National Show in Atlanta last week, the divide between the perception of competition and the reality of the sector’s operational momentum “has never been greater.”
Shapiro pointed to the small investor turnout at the show — which he called the lowest in a decade — and regulatory risks that are hard to handicap contrasted with an even more bullish stance by operators (particularly Time Warner Inc. and Comcast Corp.) which suggests that at least those two operators will beat first-quarter expectations.
“There were several other notable developments, like a little more visibility to the enterprise opportunity; more clarity on what fixed-mobile convergence may mean; and continued advances in downloadable security, which should push [set top box] costs lower and speed innovation,” Shapiro wrote.
Shapiro also noted the operators’ efforts to improve bandwidth efficiency (digital simulcast and switched digital), and the consensus from operators and programmers that the video aspirations of Internet giants like Yahoo Inc. and Google Inc. are little threat to pay TV. “With poor sentiment, historically low valuations and strong operational momentum, the only question to us is what breaks the sector out of its malaise,” Shapiro wrote. “Our answer is that we think the numbers will overpower the noise and perhaps soon.”