More people are watching more TV than ever before, so why are the traditional media companies in trouble? Cord cutting...the growing trend where audiences quit subscribing to cable and look for alternative ways to consume content. A combination of higher and higher prices coupled with some of the worst customer service on the planet have led consumers to look for alternative ways to consume content.
This week, earnings reports from top media companies have been less than wonderful. Viacom, Disney, and CBS all saw investors selling off shares resulting in the worst week since 2008.
Streaming services such as Netflix are eroding the cable base and hurting the industries share prices. More and more people are ditching TVs and cable. The selling of these stocks is a true indication that traditional TV is in trouble.
Thursday the earnings reports made clear that many are suffering a major exodus as pay-TV subscribers cut the cord, raising concerns about the long-term outlook for the entire sector. Even small declines result in a loss at the bottom line. (Disney indicated on Tuesday that ESPN has lost as many as 3.2 million.)
Viacom Inc. VIA, -13.35% led the decliners, trading down more than 20% at its worst levels, after the company reported fiscal third-quarter sales that missed expectations. The sell off extends the -7.5% decline on Wednesday, and brings the stock’s three-month loss to 41%.
Netflix Inc.’s NFLX, +2.21 stock has soared 56%.
DISH shares were down -2.5% Thursday, after the company said it lost 81,000 pay-TV subscribers during its second quarter, compared with a 44,000 loss in the same period a year ago.
Shares of Time Warner Inc. TWX, -0.81% which owns the HBO network, were down about 5% at a nine-month low, extending a 9% loss suffered Wednesday.
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