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Date:20/12/11

US cablecos' growth to rely on data, business users

Moody's Investors Service said growth in the U.S. cable industry would be driven by demand for high-speed-data services next year, as well as business customers.

The firm predicted earnings and revenues to grow around 3% in 2012, driven by demand for high-speed data services by business and domestic consumers.

Karen Berckmann said with 90% of U.S. households already subscribing to video service,"this saturation means future revenue growth will likely come from data services." The firm predicted increased competition from satellite-television and telecom rivals would also shrink the cable industry's video subscriber base.

But the firm expects rising demand for high-speed data services would allow cable companies to raise rates and make up for continuing video-subscriber losses, Berckmann said.

Another analyst, Neil Begley, said streaming video would supplant some of cable's video-rental and premium-channel revenue but would increase the strength and pricing power of the high-speed-data products.

Moody's said it expects the business segment will have the fastest growth for cable companies next year, although gains will be from a low base. The firm said the average penetration rate of the industry's three primary residential products--video, high-speed data and voice--has slowed to a trickle since 2009, and it anticipated the rate would flatline in 2011 and 2012 at 32.5% for the sector.




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