Yesterday saw earnings releases from Cablevision (CVC), Charter Communications (CHTR), and DirecTV (DTV) allowing investors to take a snapshot of the current competitive environment in multichannel TV.
I think these results along with earlier reports from Comcast and Time Warner support eh bull case for cable over the short-term. CVC continued its strong double digit growth and although subscriber metrics did not surprise to the upside as they have recently, the ability of the company to produce outstanding financial results shows that the triple play is not just a defensive strategic maneuver — it is driving renewed growth for the cable industry. Even industry laggard CHTR showed a second consecutive quarter of accelerating results albeit with growth rate still in the single digits. But for CHTR this is a definite improvement.
On the other hand, DTV subscriber growth at DTV continues to decelerate as the company is without a triple play bundle. Slower sub growth is enhancing EBITDA in the short-term but eventually this benefit will soften. Management at DTV seems to understand its toughening competitive landscape and is continuing its focus on its most profitable customers which are the most likely targets for cable’s triple play…..

I still think there is plenty of upside at Comcast. Consider that CVC and TWX are over one year ahead of Comcast in the rollout of telephony. CVC and TWX are enjoying 15-18% growth as the bundle has matured in terms of penetration and profitability. Comcast just raised guidance to 13% growth. It is very plausible to draw a parallel between the 2006 growth rates for TWX and CVC and the potential growth rate for Comcast in 2007. If Comcast’s growth does pick up further, recent analysts targets around $40 look quite realistic.