Get ready to measure 'steady' cash flow: high marks, using new metric, show why cable subs' value exceeds DBS subs.(Finance)

Multichannel News, March, 2005 by Farrell, Mike

As if cable operators haven't had enough trouble finally getting their arms around the latest metric to value their operations--free cash flow--a top Wall Street analyst has introduced another new buzzword for the industry's financial set: steady-state cash flow. There could be a payoff for embracing the new term.

Steady-state cash flow, as defined by Sanford Bernstein & Co. cable analyst Craig Moffett, could finally explain the huge valuation gap between cable and direct-broadcast satellite service providers. Steady-state cash flow is not meant to replace free cash flow--defined as cash flow after interest payments and capital expenditures are made--but to indicate the future potential of the latter metric. SNAPSHOT OF CAPACITY "The...