Nomura Equity Research analyst Michael Nathanson has been one of Wall Street’s more vocal enthusiasts for U.S. media stocks. So you can bet a lot of investors will be surprised this morning by his report downgrading the sector in general — and CBS in particular — to “neutral” from “buy.” He says 2012 will be a strong year, in part because of the influx of political ads. But he also sees growing industrywide problems which could cause earnings to “decelerate sharply” afterward. He’s concerned that television scatter market pricing is beginning to soften, which portends “slower local and national TV ad growth ahead for all.” That’s happening as pay TV subscriptions decline, turning the programming business into a zero-sum game where a show can only build its audience by taking viewers from somewhere else. As a result, channels will have to “spend more to differentiate [themselves] in an increasingly competitive market,” he says. “Within our media coverage, total cable network expense [which includes programming costs]  increased 12.1% over the first nine months of 2011, led by Time Warner (+18% due to the new NCAA contract), Discovery (+14%), and News Corp (+13%).”

As costs rise, TV producers can’t expect to keep generating more cash from licensing agreements with digital streaming providers such as Netflix and Amazon. “Netflix may become more conservative in pursuing future content deals” to steady itself — the company saw thousands of subscribers bolt following the decision in July to raise prices by 60% for those who want to continue to stream videos and rent DVDs. Even if streamers are willing to pay, programmers may want to back off. They’re starting to see evidence that digital platforms take viewers away from traditional broadcast and cable channels. “While the first wave of deals has been viewed as ‘all gravy,’ ” Nathanson says, “we worry that sentiment will change on the subject going forward.” Programmers also can’t count on cable and satellite distributors to bail them out with higher affiliate payments. They’re eager to maintain their own profit margins, and worry that if they pass higher costs along to consumers then it will drive away even more subscribers. That’s why they’re talking about dropping weak channels or offering customers low-cost packages that don’t include sports services. Owners of “must have” channels probably will still be able to get what they want, Nathanson says, but “the gap between winners and losers will widen.”  Meanwhile, most Big Media companies won’t be able to keep impressing investors by offering to return cash to them. Just about everyone except for Disney and News Corp has already laid out a long-term plan to award dividends or repurchase shares.

Why did Nathanson specifically ding CBS, which is doing so well by most measures including TV ratings? Nathanson says that all the good news is already out — which means there’s a bigger risk that the stock will decline rather than rise. CBS shares are down 1.9% in early trading.