Comcast (CMCSA)

Customer sign-ups are slowing in the second quarter more than the expected pattern of college students and others disconnecting service for the summer months. Exacerbating declining customer rates is the emergence of television programming provided free on the Internet. Comcast and other cable companies pay millions of dollars to film and TV studios each year for the rights to broadcast their programming- however, many of these studios have started providing this content gratis on the Internet, eroding cable providers' former competitive advantage.

Comcast will have to deal with increasing competition. Since Comcast is pushing their “Triple Play” bundling, they no longer only have to compete with cable and satellite operators, but also with Internet and phone service providers. This means that they will have competitors on many fronts, and will most likely have to resort to price wars which will probably hurt their revenues. Because of this increased competition, Comcast lost 233,000 basic video subscribers in Q4 2008 compared to estimates of 117,000. Additionally, the company missed estimates significantly in new subscribers in its digital video, Internet, and phone segments.

Satellite companies have been more successful than cable companies in gaining new customers. If the Triple Play is not able to convert new customers to come to Comcast, they will have trouble maintaining and growing their customer base. Furthermore, people are increasingly gravitating towards VOD and Tivo or online content, which reduces the amount of advertising spent on Comcast's cable services.

Growth in the cable industry is closely tied with growth in the housing market. Recent deceleration of new home construction could signal diminished growth for cable companies. New subscribers dropped off significantly in 2008- for example, the company only added 1.5 million new digital video customers in 2008 compared to 2.5 million new customers in 2007. Furthermore, the company has stated that it expects new customer additions to decrease even further in 2009 because of the weakened U.S. economy, signaling a slow in revenue growth during the year.