Needham & Company Downgrades Time Warner Cable (TWC) to Underperform on Title II

Needham & Company downgraded Time Warner Cable (NYSE: TWC) from Hold to Underperform based on Title II.

Analyst Laura Martin commented, "Last week, the FCC voted to regulate broadband as a utility. With words like “The Internet is too important to allow broadband providers to make the rules,” Tom Wheeler articulated an activist shift by the FCC toward assuring that "all Americans have access to all legal content over high speed broadband networks.” This suggests rising risks to broadband ROICs over the next 10 years vs the past. Valuation risks to our 10-year DCF include: 1) higher legal costs; 2) a higher discount rate reflecting higher uncertainty of FCF streams owing to potential taxes, universal service-type fees, or price regulation; and 3) lower terminal multiples because Wheeler stated that, over time, either new competitors must enter this market (like wireless) to drive consumer prices down or the FCC should intervene to assure broadband access to all."

For an analyst ratings summary and ratings history on Time Warner Cable click here. For more ratings news on Time Warner Cable click here.

Shares of Time Warner Cable closed at $154.05 yesterday.

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