2017 Could Be Up Year for MVPDs, Credit Suisse Analyst Says

The transition to an on-demand video marketplace is probably seven or so years in and has seven or so to go, meaning there's substantial life left in the traditional video bundle, Credit Suisse analyst Omar Sheikh wrote investors Tuesday. He predicted Wall Street's bearish stance that traditional media companies are structurally challenged will face several headwinds this year, including growth of virtual multichannel video programming distributors slowing the pace of video bundle subscriber declines and disrupting the competition challenge for subscription VOD, the continual robustness of the TV advertising market and the scrapping of net neutrality rules. Virtual MVPDs are "critical to the long term health of the traditional video ecosystem" by serving as a competitive response to SVOD services like Netflix, he said. The forthcoming Hulu live-streaming service likely will outperform virtual MVPDs like Sling and DirecTV Now through its library content and cloud DVR, he said. He said the pending AT&T purchase of Time Warner and 21st Century Fox's pending acquisition of Sky will, if approved, lead peers to focus increasingly on the potential upsides of scale and of vertical integration. Disney and CBS, which don't have that scale and/or vertical integration, could be motivated to look into transactions, he said.