Wall Street Loves Cable ... Still

Despite the looming specter of regulatory pricing scrutiny, a panel of top cable analysts remain bullish on the industry, pointing to its superior infrastructure and broadband leadership, but warning that potential weak spots remain in customer service and shrinking consumer wallets.

Sanford Bernstein cable and satellite analyst Craig Moffett, who created a bit of a firestorm with his downgrading of the entire cable sector on May 10 -- which some believe helped lead to a major sell-off in the stocks -- defended his decision in a panel at The Cable Show. Moffett's actions were in response to the Federal Communications move to classify cable broadband service as a Title II telecommunications service. But what worried Moffett the most was a clause in the ruling that gave the commission the right to regulate rates. While the FCC has said it will tread lightly, and Moffett believes it will, there is still the threat that rate regulation could come. The problem is the core of Title II includes language about just and reasonable pricing," Mofett said. "This is not a, 'We have the option to opine on whether processes are just and reasonable'; this is a, 'We are compelled to opine if prices are just and reasonable.' All we have raised, notwithstanding the promise of forbearance, is the reasonable question about the long-term flexibility of pricing." But Moffett stressed that he is still bullish on the cable sector, pointing to its robust infrastructure and leadership in the broadband market.