Media stocks took a beating Wednesday as concerns about sluggish ad sales and cord-cutting left investors in sell mode.
Shares of 21st Century Fox were down 5.01% at the end of trading at $28.35, Discovery Communications fell 4.22% to $26.78, CBS Corp. dipped 3.35% to $63.46, Disney slid 2.40% to $111.62, and Comcast dropped 2.03% to $38.54. Viacom and AMC Networks were hit particularly hard, losing more than 7% and 6% of their values, respectively. All of these companies are vulnerable to cord-cutting concerns. The first-quarter earnings reports for media conglomerates to date have demonstrated the weakness in national TV advertising as well. Viacom and AMC Networks are due to report earnings on Thursday.
The sell-off appeared to have been triggered by Time Warner’s quarterly earnings report. Though the media conglomerate’s overall revenues and profits beat Wall Street’s expectations, softer ad sales and domestic subscriber losses in its Turner division spooked investors. Despite airing popular programming such as NCAA basketball, Turner said TV network ad sales fell 2%.
In a call with analysts immediately following the earnings report, Turner chief John Martin expressed optimism in the U.S. advertising sector, but said that companies are being cautious.
“Given some uncertainty in the economy, we think that advertisers are holding back a bit and taking more of a wait-and-see approach,” said Martin.
Though it helped fuel the media sector drop, Time Warner didn’t suffer as much damage. Shares in the company were down 0.28% at $99.05 when the final bell rang.
There are a number of factors at play. Time Warner’s weaker ad results came on the heels of a string of weaker-than-expected video head counts in first quarter earnings reports from AT&T, Comcast, Dish Network, Verizon, and Charter.
Michael Nathanson, a media analyst with MoffetNathanson, used the recent results as evidence that cord-cutting is accelerating. Cable and satellite television providers lost more than 760,000 subscribers for the quarter, the worst showing in history.
“The industry can’t resist change anymore,” Nathanson wrote in a note. “The future has arrived”
Brian Steinberg contributed to this report.