Sanford Bernstein analyst Craig Moffett is a prodigious telecom industry quote machine and, as a stock-jock concerned with short-term gain, a frequent poo poo'er of network upgrades
. This week, Moffett is warning the cable industry
that they won't be able to simply keep raising rates (often bi-annually). Discretionary consumer spending is falling, and will continue to do so for several years. Despite the recession people keep paying for TV services -- though that's going to change, says Moffett:
"The media industry is "intractably addicted to price increases," he argued...."If you are a serious student of history, you ought to be thinking pretty hard about the fact that, for the first time in 25 years incomes are stagnant and savings rates are rising and the available pool of funds is shrinking materially."
Of course, Moffett has also stated he believes cord cutting (or people dumping cable for Internet video) is "the most over-hyped and over-anticipated phenomenon in tech history." So that raises the question: what happens when people tired of high cable prices and force channel bundles suddenly have the option of a la carte Internet video? It doesn't take a highly-paid Sanford Bernstein analyst to see where this is going.
Last quarter, TV operators started seeing real, significant subscriber losses
for the first time, though these losses were largely thanks to the economy. TV operators aren't even seeing a real impact from Internet video yet, though such an impact is inevitable for all programming except perhaps live events -- even if it takes the better part of a decade
. Still, there's a sense of over-confidence from a TV sector that believes that can endlessly jack up prices with no repercussion -- and as such it's a sector that's absolutely begging for disruption.