Moffett: 'Scant' Evidence of Over-the-Top Cord-Cutting

Says driver is cyclical factors like income stagnation, weak housing market

Wall Street has been hearing a lot from media
execs in the past few weeks on the prospect of subs cutting the cord on cable
in favor of over-the-top video, but Sanford Bernstein analyst Craig Moffett
argues that "real-world evidence of cord-cutting remains scant."

Nonetheless, he says, "investors, perhaps
inevitably, are coming down on the side of cord-cutting in this debate, and are
more than a little skeptical of blaming cyclical factors" like housing and
employment.

He says it is understandable that there appears to
be a repeat of 2005, when over-the-top video made headlines and the news that Desperate Housewives would be put on
iTunes was declared the "death of cable."

Drivers for that attention, he
said, include TV efforts by Apple and Google and Sezmi's wrapping-up
of another round of financing.

Moffett does not say that cord-cutting is not an
issue, but says instead that to the degree that it is or could become an issue,
the driver is not yet the sort of "bleeding-edge" technology adoption
that drove those 2005 headlines. Instead, he said, it is "poverty,"
by which he means more cyclical factors like income stagnation and a weak
consumer. "Anemic income growth," he says, "threatens to make
Pay TV unaffordable."

Moffett suggests that a weak housing market could
be one factor in the drop, as well as comparing 2010 figures to 2009, when
there was a one-time influx of subs tied to the DTV transition.

But perception could become the new reality
anyway. "Of course, whether household formation rates and the Digital TV
transition really are to blame for Cable's subscriber weakness may not much
matter. The cord cutting boogeyman is now back."