Is Cable Poised for Growth in 2010?

NEW YORK(TheStreet) -- Credit research company CreditSights says that through 2010 the cable industry could show better growth -- assuming that video-rate hikes hold and the pay-TV promotional battle temporarily ebbs.

"Cable remains in a good position to win broadband customers, we believe, as more of the industry adopts technology that can offer higher bandwidths," CreditSights wrote in a report published on Monday.

"The FCC has an activist regulatory agenda, but the industry previously had been living under an FCC Chairman who was considered downright hostile to cable," CreditSights added.

Satellite broadcasters and telephone companies continue to have the advantage in winning video customers, though eventually cable companies could neutralize the high-definition advantage, CreditSights says. However, the research firm notes that cable companies probably won't get as many customers to take telephone service as they would like because the number of wireless households continues to expand.

CreditSights notes that programming cost pressures lead some to predict cable companies could be forced to sell cable channels more a la carte, but CreditSights thinks programmers would rather have smaller increases than accept smaller audiences. The firm says that after building an operational and financial scenario for the cable industry as a whole, it finds enterprise valuations of most operators remain on the cheap side, based on the researcher's expectations for industry free cash flow over the next few years.

Cable stocks have largely advanced in morning trading.

Mediacom Communications(MCCC) stock has risen 1.9% to $4.30, while Cablevision Systems(CVC) stock is up 1.1% at $26.20. Time Warner Cable(TWC) stock is trading up 1.7% to $44.60, while Comcast(CMCSA) stock has added 1.2% at $16.

-- Reported by Andrea Tse in New York

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