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By John P. Ourand
Cable's basic subscribers are projected to remain relatively flat through 2006, while DBS is projected to increase its subscriber base by more than 14%. However, cable subscribers will continue to be worth more than DBS subscribers for the foreseeable future, according to projections from Citigroup Smith Barney. The main reason is cable's bundle strategy: Its subscribers are spending money on services that DBS can't offer, such as high-speed data and telephony. The segment to watch is the satellite radio market, whose companies should bring in the highest value per subscriber over the next two years. As XM and Sirius continue to grow their subscriber base (it is expected to more than triple over the next three years), their valuation per subscriber will fall.
Cable/satellite valuation: enterprise value/subscriber
|
Company |
Equity |
PF Net |
Affiliate |
Basic Subs |
Value Per Sub |
|
Symbol |
Mkt Cap |
Debt (a) (b) |
Value |
2004E |
2005E |
2006E |
2004E |
2005E |
| Cablevision cable only |
CVC |
6,196 |
8,597 |
3,286 |
2,944 |
2,944 |
2,944 |
$3,909 |
$3,909 |
| Charter |
CHTR |
1,469 |
18,545 |
0 |
6,025 |
6,025 |
6,025 |
$3,322 |
$3,322 |
| Comcast cable only |
CMCSK |
66,089 |
19,301 |
14,812 |
21,557 |
21,579 |
21,600 |
$3,274 |
$3,271 |
| Insight |
ICCI |
499 |
2,762 |
(747) |
1,279 |
1,279 |
1,279 |
$3,133 |
$3,133 |
| Mediacom |
MCCC |
616 |
2,942 |
154 |
1,466 |
1,422 |
1,408 |
$2,322 |
$2,394 |
| Rogers cable only |
RG |
6,105 |
2,427 |
3,918 |
2,258 |
2,247 |
2,236 |
$2,044 |
$2,054 |
| EchoStar |
DISH |
16,416 |
4,769 |
1,714 |
10,840 |
11,880 |
12,478 |
$1,796 |
$1,639 |
| DirecTV |
DTV |
22,437 |
(2,499) |
1,975 |
12,510 |
13,550 |
14,148 |
$1,436 |
$1,326 |
| XM Satellite Radio |
XMSR |
11,796 |
702 |
0 |
3,115 |
5,316 |
8,167 |
$4,012 |
$2,351 |
| Sirius Satellite Radio |
SIRI |
12,547 |
(77) |
0 |
1,005 |
2,149 |
5,975 |
$12,406 |
$5,803 |
| U.S. Cable Average |
|
|
|
|
|
|
|
$3,331 |
$3,339 |
| DBS Average |
|
|
|
|
|
|
|
$1,616 |
$1,482 |
| Satellite Radio Average |
|
|
|
|
|
|
|
$8,209 |
$4,077 |
Source: Smith Barney estimates; $ in millions except per sub amounts
Pro forma for all announced acquisitions, assume all acquisitions effective 1/1/99.
(a) Includes preferred securities and total pro forma debt based on year-end 2004 estimate.
(b) Excludes proportionate pro forma net debt attributable to minority owners.
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