us cable, satellite and telco trends for q1 2014
DESCRIPTION
An overview of key figures for the consumer wireline businesses of the major cable, satellite and telecoms providers in the US, for Q1 2014. KPIs, financials and other metrics, including an analysis of the impact of the Comcast-Time Warner Cable and AT&T-DirecTV mergersTRANSCRIPT
Jan Dawson Chief Analyst
(408) 744-6244 [email protected]
@jandawson
US Cable, Satellite and Telco trends for Q1 2014
Introduction• I’m making this slide deck available as a public service
• I have yet to decide whether to do this quarterly for free or to make it part of my paid offering
• Journalists and bloggers are welcome to embed the deck from Slideshare
• They are also free to use individual slides / graphics with attribution and links - contact me for high res versions
• Feedback welcome
Also available• I previously made a deck on the US wireless
market in Q1 2014 available
• For that deck, please see:
• http://www.slideshare.net/JanDawson2/us-wireless-market-trends-q1-2014
• This deck follows a similar approach
Contents
• Financials - revenues, profitability, ARPU
• Subscribers - video, broadband and voice
• Merger activity and its impact (Comcast-TWC, AT&T-DirecTV)
• Conclusions
Coverage• This deck combines detailed analysis on a small number of large
players with selected data on a larger number of players
• Of the major cable, satellite and telco providers, only Cox is privately held, while the others all provide regular financial reporting
• Cox and a large number of very small cable operators are the main companies missing from this analysis – as such, industry-level conclusions are limited
• Throughout this deck, CST providers is used as an abbreviation for the set of players covered (cable, satellite & telco)
• The focus of this deck is the consumer businesses of these companies
Financials used
6
Revenue Profits
AT&T Consumer Markets Wireline business
Cablevision Total “Cable Television” (i.e. consumer) “Cable Television” (i.e. consumer) segment
CenturyLink Consumer revenues Whole company
Charter Total revenues minus Commercial Whole company
Comcast Cable Communications minus Business Services Cable Communications segment
DirecTV DirecTV US DirecTV US
DISH Subscriber-related revenue Total operating income
Time Warner Cable Total residential Whole company
Verizon Consumer Retail Wireline business
Revenues
Source: Company reporting, Jackdaw Research analysis
Consumer revenues at major CST providers, $m
0
2,500
5,000
7,500
10,000
Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014
Comcast DirecTV AT&T TWC VerizonDISH Charter CenturyLink Cablevision
Revenue growth
Source: Company reporting, Jackdaw Research analysis
Year on year revenue growth
-4%
-2%
0%
2%
4%
6%
8%
Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014
Verizon Charter DISH DirecTV CablevisionAT&T Comcast CenturyLink TWC
Profitability
Source: Company reporting, Jackdaw Research analysis
Operating margins for major CST providers
-20%
-10%
0%
10%
20%
30%
Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014
Comcast DirecTV TWC Cablevision DISHCenturyLink Charter AT&T Verizon
ARPU
Source: Company reporting, Jackdaw Research analysis
Note: some calculations made where data is not made available. AT&T figure is for U-verse subscribers only
Consumer ARPU for major CST providers
75
100
125
150
Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014
Cablevision Comcast Verizon CharterTWC AT&T DirecTV DISH
Video subscriber growth
Source: Company reporting, Jackdaw Research analysis
ComcastTime Warner Cable
CablevisionCharter
SuddenlinkCable ONEMediacom
WideOpenWestAT&T
VerizonCenturyLink
Consolidated CommunicationsDISH
DirecTVRunning Total
CableSatellite
Telco
-1,500 -1,000 -500 0 500 1,000 1,500
Q1 2014 vs. Q4 2013 Q1 2014 vs. Q1 2013
Video subscriber growth
Source: Company reporting, Jackdaw Research analysis
Q1 2014 vs. Q4 2013 Q1 2014 vs. Q1 2013
Comcast 24 -218
Time Warner Cable -34 -748
Cablevision -14 -89
Charter 44 134
Suddenlink 18 0
Cable ONE -14 -64
Mediacom -8 -62
WideOpenWest 0 3
AT&T 200 887
Verizon 57 424
CenturyLink 25 80
Consolidated Communications 0 3
DISH 40 5
DirecTV 12 160
Running Total 350 515
Cable 16 -1044
Satellite 52 165
Telco 282 1394
Broadband subscriber growth for major CST providers
ComcastTime Warner Cable
CablevisionCharter
SuddenlinkCable ONEMediacom
WideOpenWestAT&T
VerizonCenturyLink
Consolidated CommunicationsDISH
Running total
CableSatellite
Telco
0 500 1,000 1,500 2,000 2,500 3,000
Q1 2014 vs. Q4 2013 Q1 2014 vs. Q1 2013
Broadband subscriber growth
Source: Company reporting, Jackdaw Research analysis
Broadband subscriber growth
Source: Company reporting, Jackdaw Research analysis
Q1 2014 vs. Q4 2013 Q1 2014 vs. Q1 2013
Comcast 406 1,269
Time Warner Cable 269 292
Cablevision 8 2
Charter 26 115
Suddenlink 35 69
Cable ONE 12 20
Mediacom 19 44
WideOpenWest 17 50
AT&T 110 121
Verizon 16 137
CenturyLink 66 140
Consolidated Communications 3 8
DISH 53 240
Running total 1,040 2,507
Cable 792 1,861
Satellite 53 240
Telco 195 406
Voice subscriber growth / shrinkage for major CST providers
ComcastTime Warner Cable
CablevisionCharter
SuddenlinkCable ONEMediacom
WideOpenWestAT&T
VerizonCenturyLink
Consolidated CommunicationsRunning total
CableTelco
-3000 -2000 -1000 0 1000
Q1 2014 vs. Q4 2013 Q1 2014 vs. Q1 2013
Voice subscriber growth
Source: Company reporting, Jackdaw Research analysis
Voice subscriber growth
Source: Company reporting, Jackdaw Research analysis
Q1 2014 vs. Q4 2013 Q1 2014 vs. Q1 2013
Comcast 142 699
Time Warner Cable 107 -76
Cablevision 8 -7
Charter -4 -21
Suddenlink 12 48
Cable ONE -3 -11
Mediacom 4 25
WideOpenWest -5 -14
AT&T -476 -2,185
Verizon -181 -677
CenturyLink
Consolidated Communications -3 -12
Running total -399 -2,231
Cable 261 643
Telco -660 -2,874
Total subscribers
Source: Company reporting, Jackdaw Research analysis
0
10,000
20,000
30,000
Comcast DirecTV DISH TWC AT&T Verizon Charter Cablevision Suddenlink
Video subscribers Broadband subscribers Voice subscribers
Total subscribers
Source: Company reporting, Jackdaw Research analysis
Total customer relationships as at March 31, 2014
0
10,000
20,000
30,000
Comcast DirecTV AT&T TWC DISH Verizon Charter Cablevision Suddenlink
0%
20%
40%
60%
80%
100%
120%
AT&T Verizon
Penetration of primary service base with secondary services
Source: Company reporting, Jackdaw Research analysis
This is defined as penetration by existing services of the base of customers for the primary service - video for cable and satellite providers, and voice for telecoms providers. E.g. broadband subscribers as % of video subscribers, or video subscribers as % of voice subscribers. This is a measure of companies’ effectiveness in cross-selling and and penetrating their base.
0%
20%
40%
60%
80%
100%
120%
Comcast TWC Charter Cablevision DISH
Broadband Voice Video
Merger impact
Source: Company reporting, Jackdaw Research analysis
Subscriber numbers for Q1 2014 for major cable, satellite & telco providers
0
10,000
20,000
30,000
40,000
Comcast DirecTV DISH TWC AT&T Verizon Charter Cablevision Suddenlink C-TWC AT&T-DTV
Video subscribers Broadband subscribers Voice subscribers
Note: no adjustment made for planned divestment of Comcast subscribers to Charter, because these have not been detailed by service
Merger impact
Source: Company reporting, Jackdaw Research analysis
Total customer relationships including projected Comcast-TWC and AT&T-DirecTV mergers
0
10,000
20,000
30,000
40,000
50,000
Comcast DirecTV AT&T TWC DISH Verizon Charter C’vision S’link C-TWC ATT-DTV
Note: no adjustment made for planned divestment of Comcast subscribers to Charter, because final subscriber numbers for each entity are not clear
Conclusions• The CST space continues to be dominated by a short
list of about 10 providers with over 1 million subs
• These are mostly growing and profitable
• Comcast dominates already, with AT&T and DirecTV a considerable distance behind
• There is something of a correlation between scale and profitability
Conclusions• ARPU ranges from just under $100 to around $150
per month
• The ability to sell additional services (broadband and phone for cable, and broadband and video for telcos) is critical to raising ARPU
• TV ARPUs remain around $100 per month for most providers
Conclusions• Almost all cable operators lost video subscribers year on
year, likely largely to competing telco and satellite providers, approximately 1 million in total
• Satellite providers gained a small number of subscribers
• AT&T, Verizon and to a lesser extent CenturyLink gained a significant number of video subscribers
• Among this group, there was net growth in video subscribers year on year - cord cutting is not in evidence
Conclusions• Broadband subscribers continue to grow at every
company in our sample
• All the cable and telecoms providers have now reached over 80% of their primary service base with broadband
• Total broadband subscribers now sit at 81% of video subscribers in our sample
Conclusions• Voice subscribers continue to fall rapidly despite
the gains made by cable operators
• Though cable operators gained over 600k year on year, telcos lost almost 3 million, for a net loss of 2.2 million year on year
• Broadband may well become the primary service at AT&T in the near future as BB growth continues
Conclusions• Were the Comcast-TWC (announced) and AT&T-DirecTV
(rumored) mergers to go ahead, these players would instantly become by far the largest
• DISH would be in a very distant third place, with less than half the video subs of AT&T-DirecTV
• The mergers would create two powerhouses in a completely different league from all other players
• Following divestments, C-TWC and AT&T-DTV would have a very similar number of total customer relationships at around 35m
