Cable-Operator Stocks Stay Afloat9/26/2008 8:00 PM Eastern
Cable stocks sailed through the economic storm in Washington last week, with the shares of the major publicly traded MSOs actually gaining ground — 1.9% — for the period.
The sector outperformed the market — the Dow Jones Industrial Average finished last Thursday at 11,022.06, up 196.89 points (1.8%) for the day, but still down about 300 points from its close of 11,388.44 on Sept. 19.
What seemed like a dismal start to the week — the Dow dropped more than 500 points during the first two days — began to improve last Wednesday, when the Dow fell just 27 points to 10,825.17 from 10,854.17.
|Swimming Against the Tide|
|Overall, cable operators were up slightly in a disastrous week for the stock market.|
|SOURCE: NASDAQ Web site
|Time Warner Cable||$24.83||$25.35||$0.52|
The market continued its recovery last Thursday, as investors became more confident that a $700 billion federal bailout of the financial sector would become reality. In mid-day trading last Friday, the Dow was down about 30 points.
In the cable sector, stocks got off to a shaky start but looked like they would finish the week in the black — between Sept. 22 and 25 only one MSO stock (Mediacom Communications) lost ground.
Leading the pack was Cablevision Systems, which gained $1.17 per share in that time frame, rising from $25.75 per share to $26.92 each. The rest of the sector had more modest gains, but they were gains nonetheless.
Time Warner Cable and Comcast were up, while Charter Communications remained flat. Mediacom was the sole decliner — it lost 26 cents per share between Sept. 22 and 25, closing at $6.91 per share.
Satellite-TV stocks fared a little better: DirecTV Group rose $1.54 each in the four-day period from $24.69 per share to $26.23 each on Sept. 25. That gain more than offset a decline of 46 cents per share for Dish Network, which dipped from $24.47 each on Sept. 22 to $24.06 on Sept. 25.
Cable’s performance was a bit of a departure from past weeks during the height of the credit crisis. In the first week of the precipitous market decline — between Sept. 15 and 17, when the Dow dropped a combined 812 points — cable stocks were down a collective 11.7%. A few days later, after a 778-point rally in the Dow, the market finished the week down just 33.5 points, while cable stocks fell about 6%.
Miller Tabak media analyst David Joyce said cable wasn’t the only sector that has lagged the overall Dow. And the sector is slightly more vulnerable to the economic woes that are affecting the consumer sector.
“If you look at any specific sector you’re going to have that issue,” Joyce said. “Generally cable is lumped in with consumer discretionary.”