Nomura Securities on Cable & Media: Despite Worrisome Headlines, The Eco-System Continues To Be Resilient

Nomura Securities on Cable & Media: Despite Worrisome Headlines, The Eco-System Continues To Be Resilient

Analysts, Mike McCormack and Michael Nathanson, said, "Industry pricing impact has been 8%-9%. Our bottom-up view of the content industry confirms that affiliate fee revenues increased by ~8% in 2011 and is forecast to increase by around 8% over the next two years. With the exception of DIRECTV (NYSE: DTV), we think consensus has properly discounted this. Within our media universe, Disney is best positioned to capture additional affiliate fee dollars followed closely by News Corp. (Nasdaq: NWSA), Viacom (Nasdaq: VIAB) and Scripps Networks (NYSE: SNI)...CBS (NYSE: CBS) and News Corp. have the most room for sub growth. Disney (NYSE: DIS) and Time Warner’s (NYSE: TWX) growth should be from pricing or new services."

"Our “Buy” investment case for Disney and News Corp. – and Viacom, to a lesser degree – is, in part, predicated on their ability to take a disproportionate share of content payments over the next two years and the EPS leverage that these fees deliver."

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