Cable TV stocks sizzle on AT&T deal
Analyst sees buzz in whole sector after $62 billion offer
No bidding war seen
Ted Henderson, analyst at Janco Partners, told CBS.MarketWatch.com he doesn't think Comcast will get into a bidding war with AT&T.
"I believe that if you read between the lines on this, (AT&T Chief) Michael Armstrong's staying at the table," Henderson said. "And I think that Comcast will look across the table and read that these guys are serious, that they're not going away. And what good does it do [them] to bid all this stuff up?"
Henderson said that although AT&T has "a hell of a lot of work to do" to achieve its goal of maximizing cable subscription revenues and offering local phone service to around 50 million homes, the company will "obviously" be in a very good position. That makes the stock a solid long-term play, he said.
But Henderson said valuation is an issue right now, when consolidation is driving just about every stock in the sector to all-time highs. "Do you probably get a chance to own this stock lower than this level as they exit this consolidation phase and enter this deployment phase? I think so," he said.
Shares of Adelphia (ADLAC: news, msgs) gained 3 3/4 to 65; Cablevision (CVC: news, msgs) jumped 5 1/2 to 77 5/8.
Time Warner (TWX: news, msgs), a media conglomerate which owns cable TV units, rose 1 5/16 to 73 11/16. See related story. A Time Warner spokesman declined to comment on the AT&T deal.
Even ancillary cable TV businesses fed the rally.
Liberty Media (LMG.A: news, msgs), the cable TV content specialist operated by cable TV mogul John Malone, added 3 5/8 to 69.
Interactive digital TV specialist ACTV (IATV: news, msgs), which is 25 percent owned by Liberty, gained 2 3/4 or 22 percent to 15 5/16.
"They're all going bonkers as they always do," said Cheen. "This is all about distribution."
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Bold added by me.
~B~
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