Media Stocks Decline as Concerns Raised over Future of TV Business
On Thursday the media stocks got another jolt and dropped considerably fuelled by fears of cord cutting and decline in the number of subscribers.
The fears got additional fuel as Todd Juenger, an analyst at Bernstein Research said "The market is now valuing U. S. ad-supported TV businesses as structurally impaired assets."
The analyst on Thursday also downgraded some of the top media stocks which included Walt Disney and Time Warner. He hinted at the declining TV advertising and related fees generated by the pay-TV providers. He added, "We have come to believe the affiliate fee revenue stream deserves a higher risk premium than it did before."
Now the viewers preferring the online streaming services and skipping advertisements on their DVRs, it is expected that the TV customer numbers will decline rapidly which simple means lesser revenue generated from these sources.
The concern is also highlighted by the decline which the media stocks have witnessed lately as they announced the quarterly earnings results.
On Thursday, shares of Viacom dropped 6.3% and ended the day at $40.42. Disney was down six percent at $100.02. Early in August, the company lowered outlook for the cable network arm.
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