Charter, Cable One rank among year’s highest performing media stocks

Cable One installer
A Cable One technician at work.

Cable One and Charter Communications came in at Nos. 2 and 3 respectively in a ranking of the top performing “media stocks” of 2016, published by USA Today

Culling data from S&P Global Market Intelligence, the publication found that Cable One’s market value has grown 31.8 percent this year, trailing only AT&T acquisition target Time Warner Inc. (33.4 percent). Charter is in third place, growing at 23.4 percent, just ahead of CBS Corp. (up 20.7 percent). Comcast ranks seventh at 7.4 percent, just behind concert promoter Live Nation (up 9.2 percent).

RELATED: Cable One net income up 7.5% as programing costs decline to 2009 levels

For Phoenix, Arizona-based Cable One, the Wall Street performance seemingly validates a strategy of shamelessly cutting staff and pay-TV investment, while prioritizing residential broadband and business services, which now bring in 55 percent of the mid-sized MSO’s revenue. (A Cable One rep noted that the MSO hasn't conducted layoffs and that the staff reductions have come through attribution.)

Last week, the company reported a 7.5 percent uptick in profit, with residential high-speed internet revenue increasing 18.8 percent to $86.8 million, and business services revenue growing 13.2 percent to $25.4 million. 

“This is high-level evidence of our four-year strategy to focus on residential data and business services,” said Cable One CEO Thomas Might to investors during today’s earnings call.

Cable One’s head count is down 7.6 percent, or 157 employees, year-over-year. Might said truck rolls are down 57 percent compared to 2008 levels. 

For his part, MoffettNathanson analyst Craig Moffett remains a noted skeptic of Cable One, believing its strategy is being upheld by customer price increases. 

“Obviously, Cable One’s premium valuation has nothing whatsoever to do with fundamentals,” Moffett said in a note to investors last week. “For this few who are paying any attention at all, their Q3 fundamentals remain a mixed bag; reasonably good on the surface, but unsustainably dependent on price increases — and everything to do with the almost unanimously held consensus that it is only a matter of when, not if, they are acquired by Altice.”

RELATED: Charter loses 47K video subs in Q3 as TWC promo customers flee 

For its part, Charter managed to grow pro forma revenue by 7.4 percent in the third quarter, even as it faced the challenges of integrating the huge footprints of Time Warner Cable and Bright House Networks.