When Time Warner Inc. announced lower earnings expectations in the future, the stock market responded by selling off a list of cable network stocks. From Time Warner to Discovery, from Disney and Viacom to AMC, a consistent sell off was evident. But what drastically changed? Just a week or so ago, ESPN cut 300 jobs to lower costs and hopefully improve earnings. Cord cutting has been much discussed over the last number of years; in fact, many cable operators have been posting much smaller sub losses in their latest quarter. And content companies have been pursuing new streaming deals and other revenue lines to boost earnings. So what really changed?
Sure, the announcement that Time Warner Inc. now expected lower earnings in the near future. But just yesterday, its premium network HBO announced it was the new home for future Jon Stewart content. And that news was positively received. As to the daily price fluctuations of media stocks like Time Warner, Inc., the likely means to restore earnings will be to cut costs. Expect some layoffs from a number of these companies to boost earnings for its stockholders.
