Time Warner’s investor day sent shock waves through the media world.
The media conglomerate, which owns HBO and CNN, helped tank media stocks after a disappointing third-quarter earnings call that included a weaker outlook for 2016.
Media stocks lost some $6.5 billion in value at their lowest point on Wednesday, according to Reuters, on a second serving of dismal earnings this year that has come up well short of Wall Street’s expectations.
Last quarter, Disney revealed a smaller subscriber count at ESPN, which contributed to a similar domino effect on shares.
On Wednesday, it was Time Warner Chief Financial Officer Howard Averill’s turn to play the sector’s slow-growth villain. Here are the low lights:
- The per-share earnings forecast for 2016 was dialed down to $5.25, 75 cents lower than its outlook of “close to $6,” during October 2014’s investor day. Analysts had penciled in $5.60, including currency adjustments.
- Turner Broadcasting lost 1.5 percent of subscribers during the first half of 2015, reflecting declines in video business.
- Domestic ad revenue at the Turner networks, CNN, TBS, TNT, was flat.
- Warner’s film output performed so poorly it didn’t merit a mention in the report.
Time Warner shares fell as much as 8 percent on Wednesday and settled down 6.6 percent, to $72.20. The 52-week high is $91.34.
Rival stocks fell on the bad news, with Viacom gouged by 6.6 percent, 21st Century Fox off 5.1 percent, and Disney down 2 percent.
Separately, 21st Century Fox reported a mixed quarter. Total revenues were $6.08 billion, down 6 percent compared to the year-earlier period, missing Street’s forecasts. Fox also felt the effects of currency fluctuations.
Adjusted per-share earnings were 38 cents, topping expectations of 37 cents. The cable division, which houses Fox News, and sports network FS1, saw a 7.2 percent revenue increase in revenue on improved affiliate and advertising business.
The movie unit’s “Fantastic Four,” didn’t perform as expected.
Shares fell $1.60, to $29.90.
