The FCC wants to further regulate cable companies. The firms have too much power over what programming gets on the air. The big cable firms continue to expands though acquisitions. The monopoly power gives them control over what people see and how it is priced.
At least that is what the FCC says, and it uses an old law which says that once 70% of households that can get cable actually become subscribers it can increase regulation. Two weeks ago, it looked like a lock for the agency.
The fear of more regulation plus new competition has pushed cable stocks to one-year lows. Comcast (CMCSA) traded at over $30 earlier this year. On a good day its sees $20. Shares in Cablevision (CVC) and Time Warner Cable (TWC) have also been scalped.
But, it now appears that the FCC’s 70% calculation may be a bit off. And Republican Congressmen are all over the agency with concerns that regulation could become too heavy handed.
All of the fighting means that the FCC may not change its rules at all and its may not ask Congress for new laws governing cable. Even if it does, Congress may simply turn a deaf ear.
The odds are that cable shares are going to rally.
Douglas A. McIntyre
For more coverage of cable and other parts of the media industry, get the 24/7 New Media Newsletter.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
Our expert who first called NVIDIA in 2009 is predicting 2025 will see a historic AI breakthrough.
You can follow him investing $500,000 of his own money on our top AI stocks for free.