Stocks in the media sector tumbled noticeably Tuesday after executives at Discovery Communications suggested advertising demand for TV was less than robust.
Ad demand in “the last month or so” has “gotten a little bit softer,” said Discovery CEO David Zaslav during a conference call with investors Tuesday morning. “And people are booking closer to time. We’ve been booking, on some of our networks for this past weekend,we were booking on Thursday and Friday for the weekend.”
A soft advertising marketplace in the weeks leading up to the holiday season –traditionally a fertile time for media companies – would land another blow to the media sector, which also suffered a lackluster “upfront” marketplace earlier this year. Analysts are left to wonder if the root cause is advertisers holding their money back until the last possible minute, or a more pronounced shift in how those sponsors allocate their funds.
Discovery’s muted outlook comes even after it secured a big audience for Sunday’s “Skyscraper Live” event featuring Nik Wallenda and also found better operating results after taking control of the kiddie-focused cable outlet formerly known as The Hub. Even so, noted MoffettNathanson analyst Michael Nathanson, the company “did not want to put a range on 4Q U.S. advertising, implying trends could continue to deteriorate based on ratings and weaker demand.”
Discovery shares fell 6.6% earlier, or $2.31 a share, to $33.32 on volume of 10.43 million. Average volume is 3.47 million.
And the sentiment carried over to other media stocks. Viacom Inc. was earlier off 4.22%, or $3.09 a share, to $70.10 on volume of 49.4 million. Average volume is nearly 36 million. Shares in CBS Corp. fell 4.4% or $2.40 a share, to $52.03 on volume of 12.76 million. Average volume is 8.01 million.
Media companies with more diversification, like Comcast, 21st Century Fox and Walt Disney were also down, but their shares tended to fall 1% to 2%.