“The latest round of earnings from major media companies is stoking fears that as more consumers drop their traditional pay-TV services, the long-term health of the industry’s biggest players will be threatened,” Joe Flint and Shalini Ramachandran report for The Wall Street Journal. “The growing unease about the state of the pay-television ecosystem was on display Wednesday, as media stocks were battered.”
“The share price of programming behemoth Time Warner Inc., which posted only modest 2% cable subscription fee growth in the second quarter, fell 9% in trading. Shares of Discovery Communications Inc. plunged 12%, even as the company highlighted its efforts to secure higher fees in what it called a U.S. TV market that remains ‘challenged.’ Meanwhile, shares of 21st Century Fox and Viacom Inc. fell 7% and 7.5%, respectively, on Wednesday before the companies reported their own earnings results,” Flint and Ramachandran report. “But the biggest impetus for the broad selloff, according to analysts, was Walt Disney Co., which late Tuesday cut its earnings growth target for its cable business. A conference call with analysts then morphed into a vehement defense of ESPN by Disney executives, as the network experiences ‘some subscriber losses’ due to cord-cutting and cheaper ‘skinny’ packages of channels. Disney shares declined 9.2% Wednesday.”
“Any concerns about the future health of ESPN—one of the most expensive channels, thanks to its live, must-have sports—are sure to spook investors,” Flint and Ramachandran report. “Many consumers, particularly millennials, are opting for online platforms such as Netflix, Hulu, Amazon and Apple TV over a traditional cable or satellite subscription. That, in turn, is hurting traditional distributors and programmers.”
Read more in the full article here.
MacDailyNews Take: Hopefully, this pressure provides the necessary impetus for Apple to finally get deals inked for their over-the-top Internet TV endeavor. Especially in time for this year’s holiday shopping season. New Apple TVs plus an “Apple Television” service would be well-timed in light of traditional Pay-TV’s declining situation.
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