Following on from our blog of August 6th, about the decline in TV viewing as the audience moves to digital and the consequent shift in Ad budgets, it's now being reflected in TV companies stock.
Last week, 37 Billion usd was wiped from shares in Viacom, Time Warner, Fox, Walt Disney and 5 other major broadcasters. Viacom fell -8% on Wednesday and -14% Thursday being the worst hit.
Lower than expected quarterly earnings was one reason but underscoring it all, is the disruption being caused by YouTube, Facebook, Amazon, Netflix (63 million subscribers) and others, as they erode traditional TV subscriptions. It's now a structural issue in the ongoing shift away from live TV as well as, a shift to lower subscriptions online.
Of course, some large media organisations (such as RTE in Ireland) are immune from these market shifts as they receive state support (probably 200 million euro a year for RTE). One questions why and how long that will last?
In the same week, The New York Times reported lower than expected quarterly revenue too including a fall in print advertising sales. Again, the switch to digital platforms is the key here as their traditional revenue fell -12.8% but their digital revenue was up +14.2%. Up, but not by enough to compensate. Still, they brought in 148 million usd.
So the market is starting to question the future role of traditional media companies in the digital age.
The corollary of that, is that you're likely to see a rise in the stock of digital media companies filling the gap. But definitively, for traditional TV specially, the game is up.
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