Cable Chills in Advance of Potential Net Neutrality Ruling

Regulation has a huge impact on communications and multi-channel video entertainment companies (telcos and cable), and the reason is quite simple: regulation creates, conditions or damages the business opportunity. Lots of observers would predict that imposition of strong network neutrality rules, by limiting growth options, would have clear negative impact on equity values, ability to raise capital and ultimately revenue, cash flow and profit.

It appears some of the damage is caused simply by raising the specter of such changes. "'The FCC has voted itself a loaded gun, pointed it at the carriers (cable and telco alike) and then promised not to shoot," said Craig Moffett, Bernstein Research analyst.

'What is clear ... is that we are now facing a protracted period -- likely years long -- of enormous uncertainty,' Moffett said.

"The bull case for cable stocks is a simple one," Moffett wrote. "Cable wins the broadband wars. But the prospect for broadband price regulation cuts to the heart of that thesis."

Comcast, Cablevision stocks fall on cloudy outlook The Ratings Game - MarketWatch