TV Stocks Tumble After AT&T Cord-Cutting Disclosure

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One day after DirecTV parent AT&T said it would lose subscribers because people are ditching their satellite and cable television services — a phenomenon known as cord-cutting — shares of companies heavily invested in the TV industry tumbled.
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Shares of AT&T, the culprit in Thursday’s sell-off, dropped 6 percent, dragging shares of its presumed merger partner, Time Warner, down 2 percent in the process.

 

AT&T said in a regulatory filing that in the recently ended quarter it would report gaining 300,000 subscribers to its over-the-top digital service while losing 390,000 traditional TV subscribers, for a net loss of 90,000 subs.

 

While it cited several causes — including hurricanes and changing its credit standards for new customers — it was this line in the filing that Wall Street keyed on: “The video net losses were driven by heightened competition in traditional pay TV markets and OTT services …”

 

 

Thursday’s carnage included shares of AMC Networks falling 7 percent; Dish Network off 5 percent; Discovery Communications, Sinclair Broadcast Group and E.W. Scripps Co. each off 4 percent; and Charter Communications down 3 percent.

 

 

“It should be clear that DirecTV, like all of its cable peers, is suffering from the ravages of cord-cutting,” Craig Moffett of MoffettNathanson said after AT&T’s Wednesday evening disclosure. “It is reasonable to expect a weak quarter for the whole pay TV industry.”

 

Netflix, presumably one of the beneficiaries of cord-cutting because former cable and satellite TV customers instead flock to its service, saw its shares rise less than 1 percent to $195.86, giving it a market cap of $84.6 billion, more than the combined value of Viacom, CBS and 21st Century Fox.

Written By: Tommy Lightfoot Garrett
Photographs are Courtesy: 20TH Century Fox; CBS
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