Shares of cable systems operators, able to weather the storms in the stock market over the past few weeks, were unable to withstand the fallout from the federal government’s failure to pass a $700-billion bailout of Wall Street on Monday.
The Dow Jones Industrial Average, in its biggest one-day drop in its history, plunged more that 777 points on Monday, closing at 10,365.45, down 7%. While the slide could trace its origins to Congress’ failure to pass the bailout bill, just about every sector was affected by the slide and cable was no exception.
Among cable operator stocks, Comcast lost the most ground – down 13% ($2.69 per share) to $18.01 – followed by Mediacom Communications (down 13.7% or 94 cents to $5.89 per share) and Cablevision Systems (down 5.5% or $1.44 each to $24.90). Comcast shares were also pressured after Oppenheimer & Co. downgraded the stock to “underperform” from “perform,” citing expectations of a cyclical slowdown in the communications market. Rounding out the sector was Time Warner Cable (down 6.3% or $1.59 each to $23.65) and Charter Communications, down 2 cents each (2.4%) to 82 cents per share.
Cable stocks had managed to weather the recent downturns in the stock market mainly because their businesses are considered in some circles to be recession-proof. But with the overall market in a panic, cable stocks couldn’t withstand the pressure.
“Everything was Congress-related,” said Miller Tabak media analyst David Joyce of the cable stock drop.
Operators weren’t the only sector hit – satellite TV and cable programming stocks also hit the skids during Monday’s market meltdown. Dish Network, reeling from Friday’s announcement that it lost its distribution relationship with AT&T, fell 18.7% ($4.58 per share) to $19.97. DirecTV – which won the AT&T deal – also fell, dropping nearly 11% ($2.90 each) to $23.65 per share.
On the programming side, News Corp., dipped 9% ($1.18 each) to $12.07; Viacom fell 7.25% ($1.85 each) to $23.66; and Walt Disney Co. plunged 9.2% ($3.02 each) to $29.73.
Rounding out the sector, Scripps Network Interactive fell 7.3% ($2.84 each) to $36.27; Crown Media Holdings fell 4% (20 cents) to$4.75 each; Liberty Interactive dipped 9.6% ($1.29) to $12.16 and Liberty Entertainment fell 5.7% ($1.46) to $24.23 per share.