U.S. cable operator gross revenue will rise from $35 billion last year to more than $60 billion in 2006, and most will come from new services, a study says. But basic and enhanced basic revenue is growing only at a 4 percent rate, even with price increases, and a lot of that revenue goes to networks, not cable operators.
U.S. Cable Television Infrastructure: CATV Equipment Markets and System Trends from Allied Business Intelligence also says the share of revenue from basic and enhanced basic service — the core of cable TV — will drop from 65 percent in 2000 to 56 percent in 2006.
The study cites programming costs as a problem for cable operators. "Most of the much-maligned basic price increases are because of programming cost increases, not operator greed," says VP of Broadband Research Marc Liggio.
The good news — new services offer operators much better gross margins: Cable modems provided operators with more than $1 billion in 2000 revenue, but the incremental cash flow can reach 70 percent, a number that will go beyond $5 billion in 2006, it says. And digital revenue will go from less than $1 billion to more than $4 billion in that time.