The cable industry, despite its challenges, will grow its aggregate top-line revenue by 4 percent this year, and Comcast (NASDAQ: CMCSA) will be driving that growth.
So says Moody's Investors Service, which says Comcast will account for more than half of cable industry EBITDA in 2016, generating $20.5 billion of the industry's $40 billion.
"We project Comcast's EBITDA will grow approximately 5 percent, lifting the aggregate projection by offsetting many peers with weaker growth," Moody's said. "The company has focused on protecting its base of 22 million pay-TV subscribers, primarily by improving the customer experience with the introduction of its X1 advanced entertainment operating system several years ago. In its recent annual report, Comcast attributed its best customer results in nine years in large part to the X1 Platform, with pay-TV subscriber losses falling under 1 percent in 2015. This was down from a peak of over 3 percent in 2010."
As Netflix has gained 20 million subscribers over the last five years, Moody's noted, the cable sector has lost 4 million subscribers.
But the revenue losses associated with cord cutting have been largely offset by gains in broadband, as customers look for higher and higher speeds to stream video.
"The shift in the consumption of video over mobile devices, anecdotally occurring primarily in the home, is driving the demand for wireline broadband," Moody's said. "This trend is directly, and disproportionally, benefiting the cable sector, which has a superior product in most markets, against most competitors.
"The cable plant is robust, producing superior speeds and capacity, at large scale and at a reasonable cost relative to competing alternatives," Moody's added. "The strong market position is clear in the growth of cable broadband customers. In 2010, there were nearly 40 million. Today, there are almost 15 million more — surpassing the pay-TV subscriber base in 2014. This growth is more than outpacing, and offsetting the 5 million subscribers lost in linear TV over the same period."
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