Wall Street was unkind to key showbiz stocks on Monday, prodded in part by an incredibly downbeat analyst’s report on the entertainment sector from Lehman Brothers.
Report by Lehman analyst Anthony DiClemente downgraded the firm’s ratings on CBS, News Corp., Disney and Time Warner and significantly reduced its price target on Viacom shares to $32 from $46. DiClemente cited the upheaval in the traditional film and TV biz caused by new media and digital distribution of programming, comparing it to the decline in the music biz.
“The structural shift created by ubiquitous technological change — a shift that has materially impacted the music industry — could also disrupt the core economic models of the creators of the majority of film and TV content,” DiClemente wrote. He also underscored the danger that the “entertainment industry itself may be unprepared for digital media as a disruptive technology.”
Execs at some of the five congloms cited questioned the timing of the Lehman report given the lack of any major new development in the digital arena during the past few months. Monday was a tough day all around for Wall Street’s major indices — the Dow was down nearly 57 points; the NYSE dropped nearly 82 points — but Lehman’s downgrades surely didn’t help.
CBS took the biggest hit, dropping 87¢, or 4.7%, at the close of trading Monday to $17.73, down from its 52-week low of $18.52. Viacom fell 74¢, or 2.5% , to $28.96, down from its 52-week low of $29.70. Disney eased 82¢, or 2.6%, to $30.08. Time Warner lost 20¢, or 1.4%, to $14.49, while News Corp. proved the sturdiest with a 13¢ dip, or less than 1%, to $14.63 but was near its 52-week low of $14.58.