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Raymond James managing director Frank Louthan on the factors leading to higher cable bills.
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-- new report by the end PD group finding that cable bills have been rising pretty exponentially in that the average monthly bill is expected to hit.
200 dollars by the year 20/20 and while the price gouging -- may have you thinking about cutting the cable cord at.
We have an analyst who says rising cable prices won't keep customers away for long -- while Clinton is managing director of equity research -- -- as I said.
Price gouging but in fact what's happening is.
All of these new channels cost cable companies money.
And they pass the money that they have to pay for those channels onto the consumer how much longer is that gonna continue.
Well this is gonna continue for a while you hear people complaining about you the companies are definitely worried about it.
They tell you see a real public backlash that don't think it's really gonna change that the content companies withdraw that.
The broadcast networks the network -- -- that the viewers are watching right now all the cable channels.
Are increasing prices on average about five to 7% a year most of that the cable companies pass on but not all of it.
That's is gonna continue over time though -- do you think that you'll you'll see cable bills go up probably more from from customers Bryant paying more for broad band.
As -- -- more usage based pricing for broadband.
But while they them look for a way to slice back and in a way frank just this fast track.
What a lot of people talked about over the past couple of years and that is ala carte pricing meaning.
Consumers demanding that they get to pick and choose which channels for which they paid.
There are people as much as we love ESPN who don't want to pay for that it's one of the more expensive channels.
Will -- -- the scream and yell so hard about the prices that they'll be able to say I don't want spike I don't want ESPN I do want Fox Business I do want the food channel.
We'll problem is I don't think that consumers -- a really understand how to slice this up so you can only have so many divisions of other packages of channels.
And then at some point you're gonna have to pay more for each particular channel ultimately it's not gonna save the -- consumer that much money.
As you go -- it to using streaming services now we have basically four major street streaming services the price that content for those is gonna go up.
What seemed like a free services could end up costing more money suddenly customers writing for five different checks they're not saving that much money and they have drastically -- -- I do think there is room for some smaller packages of Stanley based -- -- maybe some all sports packages -- knows we're back it is.
But it tell the consumers can really articulate exactly how they want that divided up it's just still gonna be a lot of noise and in the meantime.
The content companies to maintain a tremendous amount of power in this relationship they continue to pass the costs on.
What we talk about consumer backlash but you actually saying this surprise me that there aren't that many consumer complaints.
I would have thought that a lot of people were complaining -- -- I guess I guess are kind of a captive audience right.
Well there there are a lot of -- there are complaints but I don't seem nearly as many people doing it doing it doing something about that we do see some.
A lot of trade -- in the in the industry but you've got the telcos coming in -- satellite companies cable companies are all trading what's the -- fairly mature.
Business I think at the low end you're seeing consumers are feeling is squeeze economically and they are try experimenting with cutting the cord in in getting rid of some of that entertainment.
But for for the most part it's it's some complaints about the cable companies but you just don't see Ali Abe a broad scale exodus from pay TV at this -- Frank there -- a lot of stocks that could be capitalized upon at this point what's your favorite give a couple of names you like.
Yeah I.
The cable industry is is -- you very well this year the -- the economies meeting back CNN and rightly or wrongly -- viewed as consumer cyclicals are our favorite name the cable spaces.
Up to small cap company called Knology ticker symbols K you know well.
And we think that is is very attractive to some private equity buyers been a lot of of a news reports there in in talks the acquire we think it can -- -- -- and -- -- higher than where they are now.
And then the large ones K Comcast topped table again should see some multiple expansion and should benefit we think the whole sectors to be fairly well mr.
Frank -- and good to see -- franc appreciate it -- thanks for coming yet it is.
