‘Video Is Dead', Analyst Laura Martin Declares

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Sound-bite machine Laura Martin is still urging independent cable operators to protect their businesses against rapacious content providers.

Speaking at the Independent Show in Baltimore, a gathering of small-sized cable operator executives, the Needham & Co. media analyst urged them to focus on higher-margin businesses than their core video offerings.
That means broadband services, mobile products and commercial customers.

Laura Martin

Moderator Corey McCarthy, CFO of the National Cable Television Cooperative, got her going by reminding her that at a February 2009 conference she got attention by declaring capitalism was dead. (It wasn't capable, alone, of bringing the ailing economy back was her point.)
"What's dead this year is video," she said. "It's a very sad thing. The programmers are destroying the video business."
Consumers are gravitating to Internet and mobile applications, she said, so operators should focus on mobile services, commercial services (because business customers pay higher margins) and modems, she said.
"Take the cash flow, if there is any after the programmers get done with you, and what you need to do is protect the future," she said.
At that earlier conference and on other occasions, Martin has urged operators to resist programmers' efforts to put their content online, undermining the cable video value proposition.
Her co-panelist, David Joyce, media analyst at Miller Tabak & Co., said video isn't dead but is just one of multiple revenue streams cable operators have going for them. He advised cable operators to go all digital and capture dollars that will be going into interactive advertising.
"The crux of your business going forward is going to be broadband," he said.
Both had bullish comments about the value of the cable business. Joyce pointed out that private sales of cable systems, such as the pending Bresnan Communications sale to Cablevision Systems, are at higher valuations (8 to 8.5 times annual cash flow) than what shares of publicly held cable companies such as Comcast sell for (about 6 to 6.5 times, he said).
Martin said if cable doesn't get hit by damaging regulation from Washington, such as discussion of classifying broadband as a common-carrier service, then cable-sale multiples should rise to 11 or 12 times over the next five years.
"I think the industry has to go to war over Title II," she said.
This article was corrected on July 29 to fix Corey McCarthy's affiliation.

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