Upbeat Outlook for Comcast, CBS, Verizon and JDS Uniphase (CBS, CMCSA, JDSU, VZ)

According to a study released this week, cable network executives expect a rebound this year for the industry. Kagan Research, which surveyed more than 100 cable networks, predicts revenue for the industry will reach $33.8 billion, a 13.1% increase over last year.

* The growth will be driven by ad revenue holding steady in the double-digit growth range, the study says. Kagan sees such challenges looming ahead as license fee increases between 2%-5% annually for networks owned and operated by conglomerates and the shuffling of channel lineups by satellite and land-based cable operators if license fees are deemed excessive in light of a networks' ratings.

* Kagan Research Senior VP Derek Baine reflected on the networks' recent performance in a statement Monday: "Most major cable networks' revenue has been growing at a rapid clip...ESPN took in $3.7 billion in 2005, $2.1 billion more than its nearest competitor. Nickelodeon, TNT, FSN, MTV and USA all topped $1 billion in revenue, while 10 other networks had revenue greater than $500 million."

* This upbeat outlook for the cable industry bodes well for stocks like Comcast (CMCSA) & CBS (CBS), both of which have been beefing up their cable & fiber-optic networks to meet increasing demand not only from consmers but for telephone companies such as Verizon (VZ). Verizon itself has been expanding its fiber optic networks to offer broadband phone services. A derivative play of the fiber optic networks would be JDS Uniphase (JDSU) & Brocade.

Comments

[Yaser Anwar]

Correction: I mentioned CBS and CMCA are beefing up networks, i'd just like to correct that CBS has no fiber optic networks! Just CMCA, sorry for the error.