• by Wayne Friedman , Staff Writer, October 26, 2007

Comcast can float all boats -- cable operators' boats, that is. But when waters get rough those vessels tend to list.

And that's what happened yesterday. On the heels of Comcast's stock sinking 10% to a 52-week low, a number of publicly traded cable operators also took on water.

Some of the notable sufferers: Time Warner off 3.5%; Time Warner Cable down 8.5%; Mediacom, dropping 6.25%; Cablevision System falling 4.6%. Interestingly, traditional competitors to cable operators -- satellite TV stocks, EchoStar Communications and DirecTV Group -- also lost ground.

All this activity comes because of growing -- albeit slowly  -- competition from new telco video services, AT&T's U-Verse and Verizon's FiOS , that cable operators are now seriously, and publicly, worrying about.

What does this say about the cable business? Not a lot of good news. Comcast noted its high profile digital cable business slowed by an eye-opening 12% in its most recent reporting period.  

Alarm bells must have been ringing in media analysts' offices. Digital has been a key growth business, along with cable operators' triple play of services -- video, Internet, and phone -- that should take cable operators to new levels.

Over a decade ago, the thinking was cable could be overtaken by satellite -- because cable networks seemingly had channel capacity constraints. But cable neutralized that threat with an explosion of services and new networks in the late '90s through new digital system offerings.

The fall of cable stocks shouldn't come as surprise, as the bigger media categories have been struggling -- apart from the likes of Google. Part of the lukewarm investor response comes from a weakening economy, even more fractionalization of media, as well as question marks over what digital media efforts will win out.

The main question investors seemed to be asking on Thursday was this: Are cable operators really part of the investor-favorite digital-Internet play, such as the Facebooks or the YouTubes of the world -- or are they part of the old guard that may not catch up ?