Cable stocks gained strong yardage in the
first half of 2012, fueled by strong subscriber fundamentals
among operators and the promise of continued advertising
increases from programmers.
For the first six months of the year, MSOs Comcast,
Charter Communications, Time Warner Cable and Cablevision
Systems rose a collective 25%. On the programmer
side, stocks were up almost 20% in the half
and satellite shares rose a combined 8.6%.
While most of that growth came in the first quarter —
MSOs rose 19.7% in the first quarter and just 4.5% in the
second, satellite stocks actually lost ground in Q2 and programmers
rose a sluggish 2.1% — Miller Tabak media analyst
David Joyce said the second-quarter slippage was
more due to market issues like the continued European
debt crisis than to fundamentals.
“That caused the market to take a ‘risk-off’ mentality,”
Joyce said, adding that improved sentiment around Cablevision’s
turnaround plans and continued enthusiasm
over Charter’s new management team — led by former Cablevision
chief operating officer Tom Rutledge — have also
helped the stocks overall.
Pivotal Research Group principal and media & communications
analyst Jeff Wlodarczak was equally encouraged
by cable’s performance in the first six months of the year.
It’s a signal that investors are buying into cable’s broadband
advantage, he said.
Wlodarczak said that the stocks could pull back after second-
quarter results are released later in July and August, a
typically slow period as snowbirds and college students disconnect
service as they move to their summer homes. “That
being said, if they do pause, I’ll be out there pushing clients
to buy them aggressively.”