Lower Fee per HBO Subscriber Expected for Time Warner
Time Warner’s (NYSE:TWX) stock could see a slight decline from lower than expected monthly subscription fees per HBO subscriber. Monthly subscription fees are an important source of revenue for media companies like Time Warner, Viacom (NYSE:VIA) and News Corp (NASDAQ:NWS).
We currently have a Trefis price estimate of around $30 for Time Warner’s stock, about 4% below the current market price of around $31 and estimate that HBO constitutes around 24% of Time Warner’s stock.
Trefis members have created forecasts for two key drivers of Time Warner’s stock over the last week: (1) Fee per HBO Subscriber and (2) HBO Penetration of US Pay TV Households. These forecasts suggest that Fee per HBO Subscriber will trend below the estimates of the in-house team of analysts at Trefis, while HBO Penetration of US Pay TV Households will trend in-line.
Below are charts showing recent estimates created by Trefis members for the two drivers in detail.
On average, Trefis member forecasts for Fee per HBO Subscriber indicate a decrease from $7 in 2010 to around $6.30 by 2016, compared to the baseline Trefis estimate of a decrease from $7.20 in 2010 to around $7 by the end of the Trefis forecast period. The member estimates imply a downside of 2% to the Trefis price estimate for Time Warner’s stock. In the past, Fee per HBO Subscriber has increased from $6.50 in 2007 to around $7 in 2009.
Disagree? You can drag the forecast trend-line above to express your own view, and see the sensitivity of Time Warner’s stock to Fee per HBO Subscriber.
Our complete analysis for Fee per HBO Subscriber is here.
2. HBO Penetration of US Pay TV Households
On average, Trefis member forecasts for HBO Penetration of US Pay TV Households are in-line with Trefis estimates. The baseline Trefis estimate projects a decrease from 39% in 2010 to around 37% by the end of the Trefis forecast period. In the past, HBO Penetration of US Pay TV Households has decreased from around 40% in 2005 to 39% in 2009.
Disagree? You can drag the forecast trend-line above to express your own view, and see the sensitivity of Time Warner’s stock to HBO Penetration of US Pay TV Households.