Analyst Downgrades Cable Stocks In Wake Of Title II
Sanford Bernstein analyst Craig Moffett has downgraded his rating on cable operator stocks from outperform to neutral in the wake of Federal Communications Commission chairman Julius Genachowksi's announcement last week that the agency would try to pin at least some of its Internet regulation powers to Title II common carrier regs.
Moffett, who at press time was on his way to Los Angeles for Cable Show 2010, said in a report Monday that he was
downgrading Comcast, Time Warner and Cablevision stocks, and the entire sector for that matter. He said that the
specter of price regulation of broadband service under Title II "cuts to the heart" of the bull case for cable
stocks, which is that the industry "wins the cable wars."
The fact that the FCC has said it won't forbear the "just and reasonable" rates Title II regs "opens the door" to
broader regulation, he wrote.
Moffet says the issue is not network neutrality, but instead what he calls the "collateral damage" from the
reclassification the FCC is undertaking to insure it has the authority to impose network neutrality. That
collateral damage would include on the video and voice elements of the vaunted triple-play bundle.
Moffet's gloomy prediction for reclassification drew an immediate response from the supporters of network
neutrality. Free Press policy counsel Chris Riley said he had trouble understanding Moffet's "apocalyptic
predictions," called any collateral damage imaginary, and said that the FCC would be supplying some of the
predictability that markets like.
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Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.