Bob Iger, CEO of Disney/ESPN

Disney ESPN remark causes stock market panic

Disney remark on TV viewing sends industry into tailspin

A ‘media meltdown’?

by Meg James at Los Angeles Times

Walt Disney Co. warned investors late Tuesday that profit from ESPN and other cable channels would not be as robust as initially thought because fewer consumers are subscribing to full pay-TV packages.

The admission rattled Wall Street. The thinking was that if the world’s largest entertainment company, Disney, and television’s most profitable channel, ESPN, were not immune, then weaker companies and channels were vulnerable too.

In a massive sell-off — one analyst called it “the media meltdown” — over the last two days, Time Warner slid 10%, Disney shares dropped 11%, Fox fell nearly 13% and Viacom plunged 21%.

“One sentence from Disney and nearly $60 billion in market value gets wiped out,” Doug Creutz, media analyst with Cowen & Co., said Thursday. “Can you say panic?”

It may have been panic, but signs of trouble have been building for more than a decade as the longtime American tradition of gathering in the living room after dinner to watch TV seems to be going the way of bowling leagues and barn dances.

Viewership changes are most dramatic among younger people, the most coveted audience for advertisers. Many are watching TV shows on their tablets and smartphones or recording them for viewing later (and skipping the commercials). That is, if they watch television at all. Sitcoms and police dramas face increased competition from video games, YouTube videos, Facebook, Snapchat and other social media.

Consumers have discovered that a high-speed Internet connection is a viable gateway to TV. People under 35, in particular, are used to watching video online, and on their own schedule, and they see less of a reason to sign up for a traditional cable TV package. Streaming services Netflix, Hulu and, which started as an online bookstore, all offer original cutting-edge shows.

Some investors have concluded that owning media stocks is too risky amid dramatic changes in how viewers consume entertainment, analysts said.

complete story at LA Times

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