Comcast makes money primarily through monthly fees charged to subscribers of its analog cable, digital cable, broadband internet and digital voice offerings. The transition from analog cable to digital cable is an on going trend that has so far benefited Comcast. The company is able to charge digital cable subscribers higher average monthly fees ($67 per subscriber) than those charged to analog subscribers ($39 per subscriber). We estimate that Digital Cable constitutes 28% of the $19.22 per share Trefis price for Comcast.
However, the promise of higher fees is under threat from new competition in the digital content market. Telecos such as AT&T and Verizon have entered the pay TV market with their fiber optic offerings (AT&T uVerse and Verizon FiOS). At the same time more content is moving online through platforms such as YouTube, Hulu and iTunes as online ad supported and a la carte pricing models for content take hold. We forecast that Fee per Digital TV Subscriber for Comcast will decline from $67 per subscriber per month to $56 by the end of the Trefis forecast period due primarily to competition and the pricing impact of bundling multiple services at a discount.
Within Comcast’s content you can see how Comcast’s stock price would be impacted if Fee per Digital TV Subscriber declined faster than anticipated due to the success of new entrants such as AT&T and Verizon as well as online services such as YouTube and Hulu.
