Bernstein analyst downgrades cable stocks after FCC move
One investment analyst has downgraded his rating for cable stocks, saying the risk of regulatory uncertainty by the Federal Communications Commission dampens prospects for companies such as Comcast, Time Warner Cable and Cablevision.
Craig Moffett, an analyst at Bernstein Research in New York, changed his rating for the cable sector from “outperform” to “market perform,” a neutral rating that indicates he doesn’t think there is the growth potential he once perceived.
The issue, Moffett said in a research note, doesn’t have to do with current regulatory challenges facing the sector. But the FCC’s plan to reclassify broadband as a telecommunications service creates uncertainty over what that could mean down the line. Specifically, the agency could decide to reverse its plans to exempt carriers from price regulation and line-sharing rules, for example. The FCC said last week that it has never done so and doesn’t plan to go back on its word.
And Moffett said there could be spillover effects into cable’s voice and video businesses.
“Importantly, the regulatory issue here has nothing to do with 'net neutrality.' Instead, the issue is the collateral damage arising from reclassification in order for the FCC to have the authority to impose net neutrality,” Moffett wrote in a research note.
The rating change hasn't appeared to affect those companies’ stocks. Amid an overall market surge at midmorning Monday, Comcast is down 0.27 percent to $18.31; Time Warner Cable is up 1.8 percent to $50.36; and Cablevision is up 1.3 percent to $24.96.
May 10, 2010; 11:01 AM ET
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