Uncertainty surrounding the future of Adelphia Communications Corp., coupled
with leverage concerns, continued to sock the rest of the cable industry
Thursday, with eight of the nine publicly traded MSOs posting new 52-week
On the day, only tiny Mediacom Communications Corp. managed to stay above
water, closing at $9.91 each, just 13 cents above its 51-week low of $9.78 per
Adelphia -- which has been in a free-fall since disclosing billions of
dollars in off-balance-sheet debt March 27 -- hit an all-time low Thursday of 60
cents per share before rallying slightly to close at 66 cents. The stock was
delisted from the NASDAQ stock exchange Monday.
Charter Communications Inc. -- which has been hammered recently because of
investor concerns about its heavy debt load -- dropped to $5.31 per share
Thursday before closing at $5.50. It was the lowest point for Charter stock
since it went public in November 1999.
Cablevision Systems Corp. hit another four-year-low -- $16.08 per share
Thursday, its lowest point since Oct. 17, 1997 -- and it closed at $16.22.
Other big losers included AT&T Corp. ($11.40 per share, a 10-year low for
the stock); Comcast Corp. ($25.17, a three-year low); Insight Communications Co.
Inc. ($13.86, an 18-month low); Cox Communications Inc. ($31.22, a three-year
low); and AOL Time Warner Inc. ($16.21, a three year low).
'Cable is basically the opposite of the Visa card -- it's everywhere you
don't want to be in the market,' Banc of America Securities LLC analyst Doug
'It's highly leveraged, and people are scared of leverage; it's a
long-duration asset, meaning that the residual benefits to equity holders are
years out; and it's loosely associated with telecom,' he added. 'On top of all
that, you have to lump the Adelphia problems. It's a pretty insidious
combination, and the irony is that the fundamentals of the business are probably
as good as they've ever been.'
While cable stocks have been under pressure all year -- the sector is down
more than 40 percent since Jan. 2 -- the declines have rarely been large
single-day drops. With the exception of Adelphia, the declines in the other
cable issues have been small and gradual.
And unlike other major declines in the past, the most recent falloff hasn't
been driven by a single event, but a more general issue - accounting concerns
and high debt.
The decline in AOL Time Warner stock was certainly fueled by rumors that
chief operating officer Bob Pittman was being wooed by The Walt Disney Co. to
succeed chairman Michael Eisner -- denied by both companies.
Also adding pressure to the stock were regulatory filings that showed that
vice chairman Ted Turner had registered to sell about 254,000 shares of stock.
Earlier in the week, board member James Barksdale registered 425,000 shares for