3 Cable Companies America Hates the Most and 1 You Love


The results are in. After polling its readers -- habitual evaluators of the relative "goodness" of products -- Consumer Reports announced this month which cable TV companies are the most hated in America, and which one actually might be worth a try.

Worst of the worst
I won't keep you waiting for the results. Privately owned (and redundantly named) Mediacom Communications comes in at the very bottom of the list of 17 rated cable companies. It's followed in short order by three publicly traded firms that were rated only marginally better in quality: Charter Communications , Time Warner Cable , and Comcast , ranked Nos. 16, 15, and 14, respectively.

All four of these cable companies get Consumer Reports' absolute worst rating for the "value" of the service they provide -- a big black circle. (Indeed, Mediacom gets more fully blackened circles than anyone else, scoring unacceptably in five out of eight categories rated.) Of the three firms (barely) outscoring Mediacom, Charter and Time Warner avoid completely black marks on reliability, while Comcast actually scores a middle-of-the-road white circle for the dependability of its service.

Time Warner, meanwhile, can boast of at least the middling quality of its "cable guys" when they come to fix the cable. They probably get a lot of practice at fixing stuff, too. I mean, have you seen Time Warner's lousy dependability rating?

Charter, meanwhile, scores equally badly on both reliability and in-home customer support.

Is bigger better?
But what about the one company I said "actually might be worth a try"? Interestingly, according to Consumer Reports' findings, the best outfit in cable just might also be the biggest outfit in cell phones.

Topping the CR list for "cable" providers this year is a company that actually strings fiber-optics to the home -- Verizon's FiOS service. According to CR readers, Verizon's fiber-optic lines get top marks for reliability and picture and deliver decent audio, and the company offers customer service that's only half-bad, to boot. And as I mentioned above, Verizon is also the country's biggest cell phone provider, through its Verizon Wireless partnership with Vodafone. So if you're a fan of "bundled" services, Verizon might be a good way to go.

Sometimes, bigger is better
Verizon's stock doesn't look like a half-bad value, either. Although possessed of an obscene-looking P/E, the company churns out a lot of cash from its business. "Doing well by doing a good job," you might say. This gives the stock a price-to-free cash flow ratio of just 9.3 -- which seems cheap relative to mid-6% growth estimates and a 4.2% dividend yield.

Meanwhile, the stock's occupying the bottom of Consumer Reports' list are a varied lot. Comcast, at a price-to-FCF ratio of 12.3, could actually turn out to be a better investment than the best cable provider if it lives up to expectations of a 17%-plus growth rate. Time Warner, also with strong free cash flow, looks slightly undervalued. Charter, unprofitable, but generating some cash at least, looks like one to stay away from -- as an investor and as a customer, both.

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Fool contributor Rich Smith has no position in any stocks mentioned. The Motley Fool recommends Vodafone. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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