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 ESPN, which is available only as part of broad cable TV packages,
has been seen as a savior of the bundling business model with its
line-up of live sports and highlight reels. But the latest figures
suggest even that may not be enough to stop viewers demanding
slimmer cable packages or moving online to watch standalone
streaming services.
"I haven't seen this much red in a long time," said John Miller, a
portfolio manager at Ariel Investments, watching the broad stock
decline. "It seems like people's concerns regarding cord-cutting
have accelerated."
Disney's shares fell 9 percent on Wednesday, wiping $18 billion off
the company's market value, a day after it lowered the profit
outlook for its cable networks and Chief Executive Bob Iger said
ESPN saw "modest" subscriber losses.
"If Disney can get dinged, maybe nobody's safe," said Barton
Crockett, an analyst at FBR Capital Markets.
Time Warner Inc <TWX.N>, which has been quicker than Disney to
unbundle its popular cable offerings and embrace the online model,
also felt the wrath of investors, who sent its stock down 9 percent,
even though it reported better-than-expected profit on Wednesday.
Shares of the media company, which launched its own standalone
streaming service HBO Now and struck a deal with video-streaming
service Hulu, hit their lowest since early February, closing at
$79.80.
Discovery Communications Inc <DISCA.O> shares also got blitzed,
falling 12 percent after the owner of the Discovery Channel and
Animal Planet blamed lower advertising sales and a strong dollar for
quarterly profit slipping below analysts' estimates. The company
also said it was unlikely to buy back any more shares this year as
it looks to save cash.
Twenty-First Century Fox Inc shares closed down 7 percent, and
dropped slightly further in after-hours trading as it reported lower
quarterly adjusted revenue on a decline in TV advertising sales and
a lack of major film releases.
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CBS Corp, owner of the most-watched U.S. TV network, also saw its
shares fall almost 5 percent in regular trading. They recovered
slightly after the bell as it reported better-than-expected
quarterly profit on higher revenue from affiliates and subscription
fees.
Shares of cinema and cable company Viacom Inc closed down 7.5
percent.
Bucking the trend, Dish Network Corp <DISH.O> reported
higher-than-expected quarterly revenue and profit as it earned more
per pay-TV subscriber and added broadband Internet users. Its shares
ended up 4.3 percent.
Even so, the second-largest U.S. satellite TV company said net
subscriber losses almost doubled to about 81,000, and noted the
momentum toward cord-cutting.
Dish's "linear TV business has matured and is now declining," Dish
CEO Charlie Ergen told analysts. "Over-the-top is growing."
(Reporting by Lehar Maan, Sagarika Jaisinghani and Anya George
Tharakan in Bengaluru, Lisa Richwine in Los Angeles; Writing by Bill
Rigby in New York; Editing by Mary Milliken, Toni Reinhold)
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