Cable companies felt pressure from the secondary bank loan market last week as both Adelphia Communications and Charter Communications saw their bank debt levels shutter and loose three to five points each. Adelphia bank debt fell as five of the company's former executives were arrested by U.S. postal inspectors for conspiracy to commit securities fraud. Dealers quoted Adelphia's Century Communications credit in the 68-71 range. Charter Communications also was said to have traded down from the low 90s to the 86-88 context.
"Cable has fallen out of favor," said one dealer. The fallen levels could just be the result of technical pressures as investors watch a skittish equity market or the companies could also be facing competition from satellite companies, he speculated. DIRECTV has embarked on a campaign to win over cable subscribers, especially against Adelphia's Los Angeles system. Another market player suggested that the downward pressure came from a Merrill Lynch research report that cited a loss of subscriptions in the cable industry. Calls to the companies were not returned by press time.