FCC’s Decision on 70/70 Threshold Boosts Cable Stocks
Cable Stocks Up Across the Board on Heavier-than-Usual Volume
By Jon Hemingway -- Broadcasting & Cable, 11/28/2007 12:49:00 PM
It what seems like a rare sight these days, cable stocks were all in the green at the end of Wednesday’s trading session.
Cable investors have not had much to cheer about in recent months, but the Federal Communications Commission’s decision to back off of imposing the 70/70 rule provided a catalyst. In a day when the Dow Jones Industrial Average soared 335 points, cable stocks rallied to some of their highest levels in weeks.
The FCC admitted that it did not have sufficient data to conclude that the cable industry exceeded the 70/70 threshold, which would enable the commission to impose new regulation. The threshold would be breached if cable systems with more than 36 channels reached 70% of households in the United States and achieved a 70% penetration rate of those households. FCC commissioner Kevin Martin instead proposed that the cable industry supply its subscriber data to the commission.
Cable stocks ended higher across the board on heavier-than-usual volume. Industry bellwether Comcast closed up $0.50 or 2.57% to $19.97 per share, its highest close since Nov. 7. Time Warner Cable closed up $1.52 or 6.33% to $25.55, its best close since Nov. 16. Cablevision Systems shares were up $0.52 or 1.96% to $27.03, its highest close since Nov. 5. Mediacom Communications finished $0.15 or 3.82% higher at $4.08. Charter Communications jumped $0.12 or 10.35% to $1.28 per share. And RCN shares rose $0.85 or 6.43% to $14.06, its highest close since Nov. 7.
The sector has been under stress in recent months for a variety of reasons, including worries of increased competition, the housing slump and the threat of regulation from the FCC. The earnings-season meltdown saw many of these stocks touching 52-week lows as operators reported declines in subscriber counts.
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