Show BUSINESS end and the STOCK MARKET by BABSON'S REPORTS Copyright J 1972 n AND WAY TWO COMMUNICATION A decision last spring by the Federal Commission allowed cable TV operators to originate origin origin- ate television programs and sell com com- While this was a breakthrough for the industry it places a heavy financial financial fin fin- ancial burden on the operators since large systems with or more subscribers subscribers sub sub- scribers must originate local pro pro- graming and provide for a way two-way communication com com- communication service Also the ruling carries with it certain restrictions in order to protect major network broad broad- casters Broadband communication A 1 big plus for the cable TV industry the the Research Department of Babson's believes is the oncoming broadband of ot way two communication The technology for such interacting services as computer time-sharing time facsimile fire warning burglar-alarm burglar hookup banking services and library and information retrieval has already been developed way Two-way conversations can also be conducted between bet bet- between the viewer at home or in the theoffice theoffice office and the studio featuring local educational stock market and other public service programs With a terminal terminal terminal term term- inal the viewers can ask questions and get additional information While these capabilities are now feasible economically ec ec- economically they are not yet practical But Dut the industry feels they will soon be be- come ome a reality Tremendous Market Potential There are some 2600 cable TV systems in operation serving an estimated six million homes in around com com- Cable TV professionals foresee more cities hooking up to the systems Despite the substantial growth rate of 22 percent in the number of subscribers and 13 percent in the number of systems in the past three years even with wilh the FCC freeze on entry entry entry en en- try into new markets only 9 percent of TV households are wired for The saturation rate will be exceptionally exceptional exceptional- ly low wil with industry experts expecting it to reach only 15 percent by 1975 and 20 percent by y the end of the decade The tremendous market potential is revealed revealed re reo re- re v aled by the fact that over GO 60 million homes homs have TV sets with some 20 million million mil mil- lion of these having two or more sets Total industry revenues for 1972 are estimated at around million By 1975 some GOO million is expected and by 1980 13 billion Projected equipment IIII sales advertising channel renting charges charges char char- and other services could increase the total to 5 billion by 1980 A goal of 30 25 million subscribers in ten years seems attainable With the permitted entry entry en en- try into the top one hundred television markets where 90 percent of the viewing audience is located mostly in the unexploited unexploited un un- exploited metropolitan areas the importation importation im im- im of distant signals allows for lucrative advertising and pay TV via cable Major Companies and recommendations recommendations recommendation's Babson's Reports' Reports research staff has recently completed an appraisal of the industry and the companies involved From the ten top system operators ranked rank ed by num numbers ers of subscribers we have selected Warner Communications currently number two for a growing stake in the entertainment field has a solid position in amusements publishing publishing pub pub- lishing and cable TV the latter business business busi busi- ness with subscribers The firm has an excellent growth record and we anticipate further substantial progress Our chief recommendation in the electronic electronic elect elect- ronie equipment and components field is General Instrument Corp a diversified diversified diver diver- producer of electronic components and the largest supplier of hardware to the cable TV industry Besides being a atop atop atop top manufacturer of entertainment electronic electronic el el- el devices General Instrument is fast becoming a leader in track on-track and track off-track equipment and is a major force in the burgeoning field of sale point computer register cash systems systems and terminals for the retailing world is in the midst of an an e earn earnings rn ings turnaround and in fiscal 1973 endIng ending end end- ing February ry 28 should unveil a marked mark mark- ed upsurge in profits |