(Multichannel Stock Index)
Cable stocks enjoyed a bit of a rally Wednesday, the day after Federal Communications Commission chairman Kevin Martin’s attempt to heap new regulation on the industry fell short of the mark.
The rise in the sector was but a blip compared to the overall decline of the stocks this year, but was a welcome respite from what has been a steady decline in cable issues. Cable stocks are down about 26% this year, compared to a 60% gain in 2006.
Late Tuesday the FCC shot down Martin’s attempt to invoke the “70/70 rule,” which would have given the federal agency added powers in regulating cable once the industry achieved 70% penetration of U.S. households. The cable industry and other FCC commissioners called Martin’s math into question, claiming that cable is nowhere close to 70% penetration.
While Martin did manage to get one of his initiatives approved – rules that would force cable companies to lower their leased access channel rates by about 75% -- the defeat of the 70/70 provision was a clear victory for cable.
“Kevin Martin getting batted down has helped somewhat,” said Miller Tabak media analyst David Joyce. However, he noted that the issues that have driven down the sector for the year – declining basic customer growth and competitive fears – still remain.
The biggest gainer for the day was Time Warner Cable, with a 6.3% increase ($1.52 per share) to $25.55 each. Comcast rose 2.6% (50 cents) to $19.97 per share; Charter was up 10.3% (12 cents) to $1.28 each; Cablevision rose nearly 2% (52 cents) to $27.03; Mediacom was up 3.8$ (15 cents) to $4.08 each and Time Warner Inc. finished the day up 3.6% (60 cents) to $17.22 per share.
Shares of overbuilders RCN Corp. and Knology also gained for the day – RCN was up 6.4% (85 cents) to $14.06 and Knology rose 4.2% (53 cents) to $13.10 per share.