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Cable Stocks Mirror Market Downturn

10/24/2008 8:00 PM Eastern

What had been a hopeful opening to the week — the Dow Jones Industrial Average was up 413 points on Oct. 20 — turned into yet another period of heavy losses for the stock market, as cable stocks, despite continued claims of their recessionary resilience, continued to get pounded.

The Dow went on a see-saw ride again last week — last Monday’s gain was followed by a 231-point drop on Tuesday, a 514-point plunge on Wednesday and a 172-point gain on Thursday. The market fell 312 points on Friday, finishing at 8,378.95. All together, the market slid a total of 642 points for the week.

Cable shares, as in past weeks, mirrored the markets. Cablevision Systems fell hardest for the week, down 25.6% ($4.92 per share) from $19 on Oct. 20 to $14.08 on Oct. 24. Comcast followed closely, down 18.2% ($2.90 each) for the week, followed by Mediacom Communications (down 25.5%); Charter Communications (down 13%); and Time Warner Cable (down 9.6%).

Looking Down
Last week brought more widespread stock-price drops:
Company 10/20 10/24/08 % Change
SOURCE: NASDAQ
Time Warner Cable $20.24 $18.30 -9.6%
Comcast $15.97 $13.07 -18.2%
Cablevision $19.00 $14.02 -26.2%
Charter $0.46 $0.40 -13%
Mediacom $4.39 $3.27 -25.5%

On the programming side, News Corp. dipped 13.4%; The Walt Disney Co. was down 14.8%; Scripps Networks Interactive fell 20.8%; Time Warner was down 15.9%; and Discovery Communications dipped 24.5%. Only Viacom, perhaps because of chairman Sumner Redstone’s vow not to sell any more stock, gained ground last week, ending last Friday at $20.34 per share, up 3.6% (70 cents).

Satellite-TV stocks were also affected, with Dish Network faring best — it was down 1.8% (29 cents each) for the week to $16.19. DirecTV finished the week down 16.1% ($3.59) to $18.68 per share.

The outlook for the coming week is no more optimistic. Cable giant Comcast is scheduled to release third-quarter results on Oct. 29, and analysts are expecting strong growth for the period. Verizon Communications — which has 1.1 million FiOS TV customers and counting — is scheduled to report earnings on Oct. 27 and depending on its results could have an effect on cable stocks. But given the market’s reaction to other earnings reports last week from different economic sectors, it’s anyone’s guess how the stocks will fare.

For example, AT&T fell 6% ($1.73 per share) last week even though it exceeded analysts’ estimates for its U-Verse IPTV product — investors instead focused on continued wireline losses. Consensus estimates were that the telco would add about 160,000 to 170,000 U-Verse customers, and AT&T beat that mark by adding 232,000 customers.

Miller Tabak media analyst David Joyce estimates that Comcast will lose about 26,000 basic subscribers in the third quarter, but add about 358,000 digital customers, 319,000 high-speed data subscribers and 520,000 digital customers.

“The market is paying little attention,” Joyce said. “Stocks are moving just because of general macro, global fears.”

 

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