XAutoplay: On | OffCable TV companies and media stocks have been pressured by renewed worries that pay-TV cord-cutting is accelerating as consumers switch to on-demand internet video. Pay-TV providers pay content firms per-subscriber fees.
“Investors have seemingly adopted a zero-tolerance approach to anything remotely negative, be it an acceleration in subscriber declines (Discovery), a miss on ad growth (Scripps Networks Interactive (SNI)), a miss on quarterly operations (CBS (CBS)) or simply a miss on being liked (Viacom),” Steven Cahall, an analyst at RBC Capital, said in a note to clients.
“Put it altogether and there may be practically nowhere in media investors feel safe owning, so it’s officially a rental market,” added Cahall.
Discovery fell 3.5% to 16.70 on the stock market today. Viacom lost 1.4% to 23.07. On Thursday, Discovery plunged nearly 10%, while Viacom shed 6%.
Scripps fell 0.7% to 80.37 on Friday after slipping 3% Thursday. 21st Century Fox Entertainment (FOXA) fell 1.4% to 25.44 Friday after a slight skid on Thursday.
“We see a few paths to media getting back in favor, but admittedly none are easy fixes,” Cahall said. “One avenue to a bull move would be stabilization of key indicators: subscriber declines and ratings. Unfortunately that doesn’t currently appear to be happening.”
IBD’S TAKE: If you want to understand the state of the market, read IBD’s Stock Market Today columns throughout the market day, and The Big Picture (take a free trial) at the day’s end for timely market analysis.
CBS gained 0.6% to 54.81 on Friday after slipping 3% Thursday. Walt Disney (DIS) was up a fraction to 98.60 on Friday. Disney fell nearly 1% Thursday.
CBS on Thursday reported revenue of $3.17 billion, up 3% from a year earlier, missing views of $3.26 billion. “The revenue miss was driven primarily by lower content licensing revenue of $860 million, down 22% year-over-year against tough comparisons in the prior year, which had sales of ‘Penny Dreadful’ as well as a renewal of library content with Netflix (NFLX),” said UBS analyst John Hodulik in a report.
This post was originally published on *this site*