Comcast Can Grow, Cerberus Will Shrink

Comcast (CMCSA) can keep growing, said a federal appeals court yesterday. The Washington Post reported that the court struck down an FCC rule, dating back to 1993, that "has been in legal challenge nearly since its inception, with cable companies arguing that it was unconstitutional and the FCC and some consumer advocates saying it was necessary to prevent one company from controlling the market and gouging consumers." The rule capped cable companies' U.S. market share at 30 percent. Currently only Comcast comes close, with a 25 percent share of the market. While a Comcast spokesperson sounded a note of restrained pleasure, opponents noted "cable bills have risen at three times the rate of inflation since passage of the 1996 Telecommunications Act, which largely deregulated the industry." The FCC has not decided whether to appeal, added the Wall Street Journal.

Clients of two Cerberus hedge funds have given chief Stephen Feinberg $4.77 billion worth of votes of no confidence, says the New York Times, demanding he move to liquidate their holdings and return whatever's left of that cash. The dollar figure represents 70 percent of outside investors in the funds, a number that "surprised" Feinberg.* The firm's most notable blunder, its Chrysler purchase, along with other soured investments, left the funds down 24.5 percent for 2008. The Journal added that Feinberg blamed the "liquidity crisis" in his letter, saying many investors could no longer stay in funds that don't offer quarterly liquidity, something Cerberus, with its many illiquid investments in privately held companies, is ill-equipped to provide.

Toyota is shutting down what was once a joint venture with GM (MTLQQ), a Fremont, Calif., plant where 40,000 jobs might be lost, reports the Times. The plant's dual-ownership structure once served both companies' interests, but GM, after its bailout, bailed on production there, and Toyota, normally insulated from layoffs due to its strong market position, is having to deal with the fallout alone. The joint venture structure has left employees without many of the normal union protections, like extended benefits and seniority transfers, that autoworkers normally have. One expert believes Toyota underestimated the impact, saying, "They're viewing this as a business decision, and a plant closure in the midst of an economic collapse is also a political decision."

Cash for Clunkers may have bumped consumer spending overall, reports the Post, but outside of the auto boom, most other spending was flat or down, said a Commerce Department report. Indeed, the Times version of the story is broader, citing a "reluctance to spend" as a possible legacy of the financial crisis. A new frugality is affecting even those unaffected by the downturn. It's simply less fun pulling up to the stoplight in a Hummer than it used to be," one economist told the paper.

One might ask the citizens of Iceland about that, since the formerly high-flying country just agreed to "repay Britain and the Netherlands about $6 billion that they had given depositors who lost money in Icelandic savings accounts during the financial crisis." The Times reports the money was lent to Iceland's version of the FDIC, which found itself insolvent when the bottom fell out of high-interest online bank accounts Iceland banks once touted to foreigners. The lending parties reacted favorably, but cautiously, as the article details why "Iceland is very far from getting out of this crisis."

Our FDIC will take a longer look at newer banks, reports the Post, saying the regulator will keep its eye on them for seven years rather than the previous three. The FDIC's insurance fund has torn through $13 billion in three months to make whole the depositors of the 84 total banks that have failed this year, including three more yesterday. The SEC's inspector general takes the regulator to the woodshed over its lapses, especially when dealing with the ratings agencies, the Times writes. The agency, according to the Journal, may soon be tightening up fiduciary standards for investment advisors, too. That paper also explains how large companies with ample cash are faring well in these times, and small companies reliant on scarce credit are faring poorly. AIG's current and former CEOs are patching things up, the Journal also writes. In technology, the Times reports the Apple (AAPL) iPhone will soon be on sale in China, legally. And finally, Discovery Communications (DISCA) may be jumping into the still-heating-up e-book market, according to patent filings uncovered by the Baltimore Sun.