Cable Stocks Dip on Morgan Stanley Downgrade

Morgan Stanley media analyst Ben Swinburne lowered his outlook on the cable sector from “outperform” to “cautious” on Tuesday, citing advertising and ratings pressures, sending some stocks southward.  

In a note to clients, Swinburne said the tailwinds of the media cycle of ad recovery and content monetization have faded, replaced by “painful fragmentation” in both pay TV subscribers and advertising share.  

“We believe the next phase in the evolution of these generally well-run, high margin businesses will be a challenging period of falling returns,” Swinburne wrote. “The days of pushing through double-digit price increases on its distributors will come to an end. The growth in online video licensing, which has been staggering, has slowed and the related erosion of viewership will accelerate.”

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