Sector Snap: Goldman Cautious On Pay TV Services

NEW YORK (AP) — Goldman Sachs downgraded Dish Network Corp. to "Sell" and upgraded Time Warner Cable Inc. to "Neutral," while maintaining that Comcast Corp. was the best buy in the "lackluster" cable and satellite TV sector.

Goldman had previously rated Dish "Neutral" and Time Warner Cable "Sell."

Pay TV operators' programming costs are increasing in the high single digits every year, said analyst Jason Armstrong in a research note on the sector. That increase significantly outweighs gains in yearly sales per customer, he said.

Further, consumers are increasingly shying away from wireline voice services. That "secular decline" threatens to move into the wired broadband and video services the cable companies also provide, he said, as premium wireless services from telecommunications companies grow.

That being said, Comcast is best within the sector because its stock is cheapest and projected return to shareholders is highest, Armstrong said. Coverage of Cablevision Systems Corp. was rated "Neutral," as it has the most competition worries and its stock is expensive, he said.

Litigation issues with TiVo Inc., declining market share and the unsustainability of its promotional efforts to build subscribers make Dish a "Sell," Armstrong said. He also said Dish is lacking in unique content.