Cable Stocks Soar on Malone Talk

Liberty Chairman Touts Consolidation at Investor Meeting

Liberty Media chairman John Malone proved again Thursday that he has more than enough mojo to move markets, with shares of several publicly traded MSOs up sharply after the cable legend again said that further consolidation was in store for the cable industry.

Liberty Media held its annual Investor Day meeting in New York Thursday and Malone was in rare form, touting the benefits of consolidation to bring the industry together to solve its high cost and over-the-top competitive problems. At one point during the three-hour meeting, Malone added that he wanted Liberty to maintain its current size so it can help fund further deals.

“When you look at the Charter opportunity, it’s going to require incremental capital to pursue,” Malone said. “It’s best not to get Liberty too small too soon so we can have the capital to chase a few more rabbits.”

Liberty owns a 27% interest in Charter Communications, which has reportedly made overtures to combine with Time Warner Cable. Time Warner Cable has rebuffed those advances so far.

Those and other comments from the Liberty chairman, coupled with an overall surge in the stock market – the Dow Jones Industrial average was up 2.3% on Thursday – helped drive cable shares.

Time Warner Cable was the biggest percentage gainer among MSOs, closing at $116.95 each, up 6.1% ($6.68 per share). Charter was next in line, rising 3.5% ($4.59 each) to finish the day at $136.09. Even stocks not expected to participate in the consolidation boom got a lift – Comcast rose 2.3% ($1.02 each) to $45.35 and Cablevision Systems increased 1.3% (21 cents) to $16.43 per share.

Pivotal Research Group principal and senior media & communications analyst Jeff Wlodarczak said the gains were in part due to the overall rise in the market and the Liberty meeting, adding that after the get-together investors felt there was a greater chance that Charter would pursue the larger cable operator.

But MSOs were the only big gainers for the day. Liberty Interactive, which announced it would split into two tracking stocks next year, rose 7.2% ($1.64) to $24.50 each, while Liberty Media – which earlier announced a deal to buy back 6.3 million shares of its stock from Comcast, increased 2% ($2.77 each) to $146.08 per share.

Other stocks that posted big gains included Time Warner Inc,. up 4.2% ($2.71) to $67.32; CBS, up 4% ($2.14) to $55.76; DirecTV, up 3.8% ($2.20) to $60.15; Starz, up $3.2% (90 cents) to $28.83; Scripps Networks Interactive, up 3% ($2.22) to $76.95; and Walt Disney Co., up 3.1% ($1.9) to $65.58 per share.