Tags: Cable | Stocks | FCC | Concerns

Cable Stocks Fall on FCC Oversight Concerns

Tuesday, 11 May 2010 08:49 AM

 

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Shares of some of the largest cable TV operators failed to join Monday's stock market rally, dragged down by concerns over potential changes in federal oversight of the industry.

Craig Moffett, a cable industry analyst with Sanford Bernstein, cut his stock ratings for Comcast Corp., Time Warner Cable Inc. and Cablevision Systems Corp. to "Market Perform" from "Outperform" on Monday.

The Federal Communication Commission's plan for regulating broadband Internet connections "opens the door to broader price regulation and thereby fundamentally alters the equation for cable," Moffett told clients in a note.

The upshot is that cable providers may not be able to charge as much if the FCC takes a stronger hand at regulating the industry.

Comcast fell 44 cents, or 2.4 percent, to $17.92 in afternoon trading. Time Warner fell 9 cents to $49.38 and Cablevision fell 56 cents, or 2.3 percent, to $24.08.

Moffett said the problem for cable companies is not so much the FCC's move to impose so called net neutrality, which would block service providers from prioritizing or discriminating against Internet traffic moving through their pipes. He said the problem is "collateral damage" from the FCC taking the authority to do so, because it creates the potential for price controls.

And that could hurt the amount of revenue cable companies can take in per customer.

"The FCC has voted itself a loaded gun, pointed it at the carriers ... and then promised not to shoot," Moffett said.

The FCC's broadband plans are still uncertain. The agency is likely to face legal challenges and Republicans in Congress have voiced opposition.

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