Key Highlights

● Cable One fell $4.24 to close at $11.14.

● A report linked the drop to legal action by CoBank.

● The report was not independently confirmed.

● Reported first-lien financing of about $1.25 billion was pending.

Cable One (NYSE:CABO) plunged on Friday, October 9, falling $4.24 to close at $11.14 from $15.38 the previous day. The shares slipped further in after-hours trading.

According to a report, the decline was linked to legal action initiated by CoBank ACB seeking to block Cable One's planned Acquisition of the remaining stake in Mega Broadband Investments, a deal in which Private Equity firm GTCR is also involved. Court and filing details behind that report were not independently confirmed, and the report did not name its original source.

CoBank is a cooperative lender that provides financing to rural infrastructure businesses, including communications providers.

The Mega Broadband deal

Cable One already owns a minority stake in Mega Broadband Investments, a regional cable operator, and has been working toward buying the rest of the business, just over half. Earlier this month the company set out the state of play. On October 2, Cable One reportedly said it was in advanced financing talks with GTCR, and it had extended the deadline for the Mega Broadband transaction to October 9, according to a report from October 5.

The same report said Cable One is reportedly close to securing about $1.25 billion in first-lien financing, which would rank first in line for repayment. Financing was expected to be finalised by Friday. No confirmation of a completed financing was available by the close.

No court filing or company statement was available to confirm the details of the reported legal action, and the outcome of any legal process cannot be predicted.

About Cable One

Cable One provides broadband internet, video and phone services, mainly to smaller cities and rural communities across the United States, under brands including Sparklight. Like other cable operators, it has faced competition from fibre and fixed-wireless providers.

A rough day for connectivity stocks

Friday was difficult for much of the telecom and cable world. SpaceX (NASDAQ:SPCX) agreed to buy Grain Management's nationwide 800 MHz spectrum for about $8 billion, according to market data, a deal that needs FCC approval. Investors worried that SpaceX's Starlink Mobile could become a fourth national wireless carrier. T-Mobile (NASDAQ:TMUS), AT&T (NYSE:T) and Verizon (NYSE:VZ) tumbled, losing about $39 billion in combined market value, and cable operator Charter Communications (NASDAQ:CHTR) slid as well.

There is no indication the SpaceX deal is related to Cable One's situation, but it added to a gloomy mood around connectivity stocks. Communication services was the worst-performing S&P 500 sector on the day.

The broader market

Overall, stocks rose. The S&P 500 gained 46.18 points to 7,811.54, the Dow climbed 423.31 points to 51,654.95 and the Nasdaq Composite added 172.83 points to 27,366.17. On the NYSE, advancing stocks outnumbered decliners by about 1.65 to 1. The 10-year Treasury Yield held near a 24-year high, a backdrop that raises the cost for companies seeking new financing.

A Company Statement Would Settle the Open Questions Around Mega Broadband

Investors will be looking for any statement from Cable One on its Mega Broadband transaction, the status of the reported financing and any developments in the reported legal action. More broadly, US stocks trade Monday, October 12, while bond markets close for Columbus Day. September consumer prices arrive Wednesday, October 14, bank Earnings run October 13 to 16, and the Fed meets October 27 and 28.