
One major
media analyst says it's time to pull back on cable stocks -- with the advent of a big broadband regulatory push and a continued fleeing of customers.
“With stocks having largely achieved our
target prices, with cord-cutting risks mounting, and regulation clouding the path forward in broadband, it seems to us to be time to reduce exposure,” says Craig Moffett of MoffettNathanson
Research, in a report.
Moffett has downgraded the big three cable stocks -- Comcast, Time Warner Cable, and Charter -- to “neutral.”
“Even as subscriber trends for
cable are getting marginally better, gross profit per subscriber is getting worse, driven down by both spiraling programming costs and the spin down into small service bundles.”
MoffettNathanson warns that residential pay TV penetration of occupied households continues to slip -- once a high of 88% in the second-quarter 2010, it has dropped to 85.6% in the third quarter
2014.
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Some cable networks have seen a drop of 2% in distribution over the past two years. This comes as many networks -- broadcast and cable -- have looked to start up their own stand-alone
digital TV services.
In midday trading, Comcast stock was down 1% to $58.84; Time Warner Cable was off 1.5% to $147.41; and Charter slipped 1.2% to $175.77.