Media Industry Wants to Forget Last Week

Shares of the largest media companies in the U.S., such as Viacom, Walt Disney, Time Warner, CBS and Comcast all were hit hard this past week.

That was due to investors becoming more and more worried about the crisis to the typical business models posed by the rising number of cord-cutters, or customers quitting the services that over pay-TV.

Disney, whose properties include ESPN the cable sports behemoth, fell almost 9% following its announcement of losses of subscribers at its network, long a juggernaut financially.

Worries about Disney then pushed down Time Warner over 9%. Viacom, the owner of MTV and Comedy Central, plunged over 20% after it reported earnings that were disappointing as its ad revenue dropped due to a decline in its ratings.

Comcast, the largest cable company in the world, fell by about 6% as it announced the loss of 8,000 video subscribers during the recently ended quarter while gaining more than 407,000 Internet customers,.

CBS, the CBS MoneyWatch parent, fell close to 6% even as Les Moonves the CEO raised the forecast for fee income for the company from its pay-TV operators to more than $1 billion in 2016, which is a year earlier than originally expected.

One prominent shareholder in the media industry believes the sell-off in the sector was overreacting on the news over ESPN, which many had thought would weather the challenges facing other networks due to most programming of sports being watched live.

ESPN by far is the most expensive channel that providers carry and it is a huge generator of profits for Disney.

Cord-cutters remain a small but nevertheless a growing problem for the operators of pay-TV. A survey from June by TiVo’s Digital Savers showed that 8.2% of the respondents cut the cord during 2014, which was an increase of just 1.3% from 2013.

A recent poll released found that over 77% of adults in the U.S. indicated they would prefer to purchase only channels they preferred to watch, also referred to a pricing a-la-carte.

Even scarier for this industry are the cord-nevers, who never have had pay-TV service. They tend to be disproportionately younger people and never get into the habit of receiving and paying for pay-tv.

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