Bernstein Cuts Rating On CVC, CMCSA, TWC

Craig Moffett of Bernstein Research reduced his outlook on the cable sector. He also slashed the ratings for Cablevision (NYSE: CVC), Comcast (NASDAQ: CMCSA) and Time Warner Cable (NYSE: TWC) to “neutral.”

The downgrade was prompted by the proposal by the Federal Communications Commission (FCC) on new rules that would grant more control on broadband to the agency. The FCC has made the proposal as it wants to have control on the transport of Internet traffic and hamper cable providers from restricting services to other companies.

In his research note, Moffett said that "the uncertainty introduced by last week's regulatory developments" has prompted him to downgrade CVC, CMCSA and TWC. Moffett considers the proposed changes in rules as the "nuclear option" that has the power to cut growth of the cable sector. Some critics have gone a step further and said that the FCC plan would crimp the return on investments (ROI) from upgrades and expansion initiatives implemented by the cable shops.

The downgrades by Bernstein, however, will not affect the market as it is enjoying a rally following heavy selling over the past week. Following the $1 trillion package put together by the European Union for Greece, the market is set to rise substantially today.

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