×
You will be redirected back to your article in seconds

Media Stocks Continue Slide, as Netflix Shares Shoot to Record High

Investor sell-off spurred by concerns pay-TV biz is in decline

Stocks of major media companies continued their decline Thursday morning — amid investor fears that the pay-TV business is on the cusp of a big downward spiral — while shares of streaming leader Netflix popped to all-time highs in early trading.

Hardest hit among media congloms were Viacom and 21st Century Fox, both down 10% in early trading. Also falling lower were Disney (down more than 4%) as well as CBS, Time Warner, Discovery Communications, Scripps Networks Interactive and AMC Networks. The declines, coming after a big drop Wednesday, were fueled by Viacom’s disappointing quarterly results reported before the market opened.

By contrast, Netflix was up nearly 4%, trading as high as $128.85 per share, as Wall Street continues to rally on the company’s prospects for international growth.

The stock market woes for the media conglomerates come after a major selloff Wednesday, which erased some $37 billion of market value for eight media companies, according to Sanford Bernstein analyst Todd Juenger.

The drop in media stocks Wednesday were triggered by Disney’s cut forecasts for pay-TV affiliate fee increases from “high singles” to “mid-single digit” percentages in reporting earnings, and CEO Bob Iger’s acknowledgment that ESPN has seen “some subscriber losses.” That triggered “a sky-is-falling mentality among media investors with respect to expectations on cord-cutting,” Juenger wrote in a research note.

The severe reaction in the market was overblown, in Juenger’s opinion, who said he’s optimistic that the pay-TV bundle will continue to remain solid even as subscribers levels continue to slowly erode. “We believe yesterday’s dramatic selloff was much more severe than warranted by any new evidence of risk,” he wrote.

There are signs the U.S. pay-TV sector is contracting at a faster rate. The industry lost a net 357,000 subscribers in the second quarter of 2015 (excluding Cablevision and DirecTV), versus a decline of 151,000 subs in the year-earlier period, according to estimates by research firm MoffettNathanson.

“Questions around the death of pay TV are now front and center,” analyst Michael Nathanson wrote in a note, “even if the size and pace of declines are likely being overstated by press and Street commentary.”

More Biz

  • pharrell brain child show

    'Blurred Lines' Flares Up Again - Marvin Gaye Family Claims Pharrell Perjured Himself

    Like a zombie that just won’t stay dead, the “Blurred Lines” case keeps coming back. While the 2015 verdict, in which Pharrell Williams, Robin Thicke and the song’s publisher were ordered to pay nearly $5 million to Marvin Gaye’s family for infringing upon the late singer’s 1977 hit “Got to Give It Up,” was basically [...]

  • WGA Agency Packaging Fight Placeholder Writer

    WGA-Agency Showdown: Role of Showrunners at Heart of Legal Arguments

    The Los Angeles courtroom of U.S. District Judge Andre Birotte was packed with well-dressed lawyers on Friday morning, eager to watch a high-stakes brawl between Hollywood’s largest talent agencies and the Writers Guild of America. Birotte allowed only four lawyers from each side to sit at each table, leaving the vast majority of the attorneys [...]

  • 700700 + Ted Turner Dedication. December

    Ted Turner Tributes Established With WarnerMedia Gift to University of Georgia

    WarnerMedia has established a scholarship, internship program and exhibition hall at the University of Georgia to be named after maverick media mogul Ted Turner. The company has gifted $550,000 to the university to create the Ted Turner Scholarship Fund, for students attending the school’s Grady College of Journalism and Mass Communication, which is also the [...]

  • WGA Agents Contract Tug of War

    Judge Leans Toward Agencies' Position in Writers Guild Antitrust Suit

    A federal judge indicated on Friday that he will allow the three major agencies to pursue their antitrust lawsuit against the Writers Guild of America. The WGA has urged U.S. District Judge Andre Birotte to throw out the suit, arguing that its actions in its ongoing battle with the agencies are protected under antitrust law. [...]

  • Keli LeeStep Up Women Network 9th

    Keli Lee Exits ABC Studios International as Disney Considers Division's Fate (EXCLUSIVE)

    ABC veteran Keli Lee has left the international arm of ABC Studios as Disney considers the future of the London-based content unit, Variety has learned. Sources said Disney has told the creative community that there “has been a re-evaluation of ABC Studios International” and that it is re-assessing “the creative direction” of the business. There [...]

  • Biggest Scandals Feuds and Apologies of

    Biggest Scandals, Feuds and Apologies of 2019

    Variety looks back on some of the biggest scandals, feuds and apologies of 2019: College Admissions Scandal Wealthy parents including Felicity Huffman and Lori Loughlin were charged with bribing school officials to get their unqualified kids into prestigious universities. Shane Gillis Executives at “SNL” hired, then fired, Gillis in September, before the new season started, [...]

  • Biggest Media Moments of 2019

    From 'Catch & Kill' to Shepard Smith: The Biggest Media Moments of 2019

    Variety looks back on some of the most memorable media events of 2019: ‘Catch & Kill’ Reopens Wounds at NBC News Ronan Farrow’s book relitigates his complaints that NBC News tried to tamp down his investigation of harassment and assault allegations against Harvey Weinstein. NBC News denies the claim. The book contains new allegations against [...]

More From Our Brands

Access exclusive content