Commentary

Predictions From The Informed

Among the predictions for the media, internet and communications industry for 2019, from Pivotal Research Group analysts Jeffrey Wlodarczak and Brian Wieser are :

Cord-cutters are going to keep on cutting, but investors who think fixed 5G will be universally adopted should think again, the analysts said. The pair released their predictions for the coming year in a note earlier this month:

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 Cord-Cutting

  • “Expect 2019 pay TV losses to continue at a similar pace to ’17 and ’18 as consumers continue to rebel against the rising price of pay TV amidst the continued emergence of cheap entertainment alternatives.”

Satellite Declines 
  • The analysts predict that satellite TV subscriptions will continue to decline, forecasting a drop of 2.5 million customers in 2019, up from a drop of 2.1 million in 2018.

Peak TV
  • Margins will continue to erode for TV content producers, Wlodarczak and Wieser said. 
  • Content packagers or networks will need to increase their programming spend at a rate that likely exceeds what consumers will pay in order to maintain revenue growth and relevance, the analysts said. 
  • "This will contribute to ongoing margin erosion, especially as we see national TV advertising gently declining on an ongoing basis.”

The Wide World Of Sports 
  • As consumers move away from cable and satellite, new providers will step forward to provide the collective sports fix, in Wedbush's view. 
  • “It seems inevitable that one of Amazon, Google or Facebook will aggressively continue to push for more top-tier sports rights, especially as some major packages are soon up for renewal,” Wlodarczak and Wieser said. 
  • “Of course, some leagues may prefer not to associate themselves with Facebook at any price,” the pair said. 
  • Spending by "deep-pocket" companies on sports content will inflate its price, the analysts said. 

Other Predictions 
  • “Cable company share buybacks should accelerate materially in ’19, providing a steady wind at the back of stocks.”
  • Fixed 5G fails to penetrate the mass market and remains an unlikely major competitive threat to cable data.
  • Cable secures a more attractive wireless mobile virtual network operator as Sprint Corp and T-Mobile Us continue to work on a merger deal , whether the merger is approved or not.
  • Netflix, Inc, which Wedbush rates with a Buy, has won the race for over-the-top streaming services and should continue to see healthy subscriber growth in 2019, even with the launch of a Walt Disney competitor, in the sell-side firm's view. 
  • Comcast Corporation, for which Pivotal has a Buy rating, stops disclosing its individual subscribers and switches its focus to “net new customers,or customer retention.”

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