The cable TV industry is facing an increasingly grim future as cord-cutters spurred by a still dour economy, early adopters of over-the-top delivery services like Netflix, and competing services like AT&T's U-verse and Verizon's FiOS continue to erode its support on Wall Street.
Moody's Investors Services became the latest convert to the "End of Cable is Nigh" crowd (or at least, "the Cable is no Longer King cadre), this week downgrading its outlook for the cable sector from "positive" to "stable with a positive outlook," a minor change with a potentially large impact among investors.
Moody's SVP Russell Solomon said demand for cable packages that include Internet, digital video and phone are trending downward, and that increased costs of content acquisition will squeeze profit margins.
"We believe that pricing for video service offerings, in particular, has reached an inflection point from which more customers will more actively look to reduce their overall cable bills," Solomon told the Associated Press.
Moody's said increased advertising revenues and cost-cutting in the industry will help it finish strong this year, but said it expects growth to be held to between 3 percent and 4 percent through 2011.
As for the impact of cord-cutting and defections to alternatives, Moody's says it expects cable's share of the pay-TV market to slip below 60 percent by 2011, a dramatic decline from the 70 percent market share it held in 2005.
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