Media stocks are getting destroyed

There’s a massive sell off underway in shares of media companies.

After Disney’s huge 9% loss on Wednesday, it seems that many of its media peers are following the company lower as markets weigh the implications of a cable-bundle legacy that could be facing a major shakeup.

In early trade on Thursday, Disney shares were down another 4%.

Some of the other damage includes:

  • 21st Century Fox: -10%
  • Viacom: -11%
  • Scripps Networks: -6%
  • Comcast: -2%
  • Time Warner: -1% (after an 8% decline on Wednesday)
  • AMC Networks: -7.5%

On Wednesday, Disney shares fell after the company lowered expectations for subscriber growth at its flagship sports network, ESPN.

On Disney’s earnings call, CEO Bob Iger defended ESPN, which has been under fire recently as analysts question the future of the cable bundle, of which ESPN is by far the most dominant player.

ESPN currently gets about $US6 per cable subscriber while its nearest competitors command fees of $US1.50 or less.

A New York Times report on Thursday also asked if the future of cable is doomed. In this report, the Times quoted BTIG analyst Rich Greenfield who said, “You have both legs of the media stool being kicked. The consumer is shifting, and these media companies are not built to take advantage of technological disruption.”

Markets were broadly lower on Thursday, but an existential crisis in the cable industry was making some of the sector’s biggest players the day’s biggest losers.

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