Cable Lost Ground to Streaming. Now Its Broadband Business Is Under Attack
Cord-cutting was only the beginning of cable’s troubles. After streaming gutted its TV business, telecom giants are coming for one of its most profitable remaining business: home broadband. The fallout has left two cable giants among the cheapest stocks in the S&P 500, yet Wall Street still isn’t convinced they’re bargains.
Price war, no winners: Broadband prices are falling even as inflation keeps squeezing household budgets. UBS estimates fiber prices have dropped 7% to 14% over the past year, while cable prices have fallen 17% to 27%. Telecoms can afford it, since bundling internet with wireless keeps phone customers from wandering. Cable can't, since stand-alone broadband carries gross margins of 70% to 90% and was the fallback after streaming gutted pay TV.
- Comcast has lost nearly 60% of its market value over five years, while Charter has plunged 84% as broadband competition intensifies.
- Fiber holds roughly 22% of broadband share versus cable’s 56%, but now reaches 65% of US households, threatening cable’s remaining customers.
The Cheap Stock Trap
Charter trades at just three times forward earnings, the lowest multiple in the S&P 500, while Comcast ranks sixth-cheapest at six times. Neither valuation comes with a quick turnaround in sight. Comcast CFO Jason Armstrong warned this month that broadband subscriber losses aren't likely to ease soon, citing soaring fiber-optic cable costs, fixed wireless competition, and satellite broadband.
- Fixed wireless has captured 14% of broadband share, while Starlink holds 4% and is gaining ground in rural markets.
- Morningstar slashed Charter’s fair value estimate from $400 to $280 and lowered Comcast’s from $41 to $36 as broadband growth expectations weaken.
Defense case: Cable’s counterpunch is DOCSIS 4.0, bringing fiber-like speeds to existing networks, alongside cheaper mobile plans and streaming bundles. Morningstar still sees both stocks as undervalued but favors Comcast’s lighter debt load. UBS prefers AT&T, which overtook Verizon in fiber reach after buying Lumen’s fiber business. Yet Comcast CFO Jason Armstrong warned, “Satellite looms out there as a potential threat.” Even rock-bottom valuations can’t save a business losing its grip on the market.
