AT&T Leads Late MSO-Stock Rally

Last year was lousy on many levels, as the nation reeled from a recession and
the Sept. 11 terrorist attacks. But from a business perspective, the cable
industry showed signs of a rebound.

MSOs can thank an unlikely benefactor: AT&T Corp.

AT&T -- which dragged down the sector in 2000 with a 68 percent decline
-- posted a 17 percent gain in 2001, fueled primarily by its late-2001 decision
to sell AT&T Broadband to Comcast Corp. in a deal valued at about $72

That transaction fueled speculation about further consolidation, which helped
other MSO stocks.

On average, the stocks of the top 10 MSOs declined about 15 percent, an
improvement over 2000's 26 percent downturn.

Late in the year, it looked as if the MSO sector was headed down the same
path as 2000, but AT&T's decision to sell its cable unit to Comcast injected
some new life.

When AT&T and Comcast announced their deal after the markets closed Dec.
19, MSO stocks were down 19.6 percent for the year. But consolidation
speculation lifted share prices, especially for smaller operators.

Insight Communications Co. Inc. and Mediacom Communications Corp. ended the
year by posting gains of 7.1 percent and 7.4 percent, respectively. Those
companies had been down 4.4 percent and 2.4 percent, respectively, Dec. 19.

MSOs also fared better in terms of market capitalization in 2001, according
to Multichannel News calculations.

In 2000, MSO market caps declined by 36 percent, from $401.3 billion Jan. 3,
2000, to $256.5 billion Dec. 27, 2000.

Although market caps declined last year, the drop was far less dramatic -- a
2.1 percent decline, from $291.3 billion Jan. 2, 2001, to $285.2 billion Dec.

By falling 15 percent, large MSOs outperformed the NASDAQ index, which
declined about 21 percent for the year, but lagged behind the Standard &
Poor's Corp.'s 500, which was down 13 percent. The Dow Jones Industrial Average
declined 7 percent.

It was the first time since 1973-1974 that the NASDAQ, the S&P 500 and
the Dow showed losses in two consecutive years.