For cable, it's Maul Street

Historically, when Paul Allen talks with his money, people listen. And, naturally, the folks at Charter Communications were understandably excited as the Microsoft multibillionaire was getting ready to disclose that he had scooped up 5 million Charter shares in the open market.

Now, $20 million isn't a big check to Allen, who has invested $7.2 billion in Charter. But he wanted to cast a vote of confidence in Charter and the cable industry, which recently has been tarred and feathered by investors. Nine other Charter executives and directors joined Chairman Allen, including CEO Carl Vogel and Allen adviser Bill Savoy.

So what kind of effect did Allen's gesture have on Wall Street? Charter's stock traded down the morning after Allen's securities filing hit last week and only rattled around the next couple of days.

Media stocks are pretty much poison to the market right now, and no antidote is in sight. As if the scandal at Adelphia Communications weren't enough to feed investor paranoia about cable companies' management, along comes the accounting scandal at high-flying Worldcom, a telco with debt and deal addictions, which seems to have overstated its earnings by $3.8 billion or so.

Then last week, Vivendi's board ousted Chairman Jean-Marie Messier for making a mess of his media-acquisition campaign (see The Week That Was, page 10). To some investors, that's raising questions of whether media mega-conglomerates like AOL Time Warner make sense. (Somehow, doubters never seem to focus on Viacom's success at this strategy.)

Bear Stearns & Co. media analyst Ray Katz said it could take a while—and a round of solid earnings reports—to control the fires.

"It's trust and it's accounting," he said. Last week, investors were saying, " 'I'm not going into a long weekend holding this. For all I know, a stock I own is going to be in The New York Times Sunday over some scandal.'"

Cable stocks have taken the worst hits, with closely held Cablevision and Charter taking the worst assaults (of course, except for Adelphia, now under Chapter 11 bankruptcy protection). Cox and Comcast have done better, off a mere 40% since January. Even a rebounding ad market hasn't been able to lift non-MSO media sectors. Disney shares are off 33%, and it's almost something to brag about.

Brace yourself for media companies' quarterly conference calls to discuss earnings. They're going to get a lot longer, and the executives are going to talk a lot more about accounting issues.