Media stocks catch their breath after a two-day meltdown
The offices of Viacom are seen in Times Square in New York City. Stock prices of media companies have dropped as consumers cut back on traditional media usage and turn to Internet-based entertainment.
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The media business took a deep breath on Wall Street after suffering a beating this week.
Major media stocks recovered some ground Friday following a two-day decline that wiped out tens of billions of dollars in market value.
The widespread meltdown came after 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.
Viacom Inc. shares climbed $1.37, or about 3%, to $45.47 on Wall Street after taking a combined 21% plunge on Wednesday and Thursday. Disney shares ticked up 1% after falling 11% over two days.
21st Century Fox was up 3% at the close of the financial markets in New York, and Time Warner gained 1%.
Shares of “Hunger Games” studio Lionsgate surged more than 6% after posting quarterly earnings that beat analysts’ estimates. The Santa Monica company reported adjusted net income of 26 cents a share for its first fiscal quarter, compared with Wall Street expectations of 7 cents a share.
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Lionsgate’s profit fell 11% from the same period a year ago because of a lower revenue from its movies in theaters and on home video. Total revenue dropped 9% to $409 million, though sales from its TV production business increased 14%.
Its stock had been hampered over the previous two days as fellow media and entertainment companies suffered from concerns that the unraveling of the traditional pay-TV bundle will accelerate.
Lionsgate Chief Executive Jon Feltheimer told analysts Friday morning that “disruption in the marketplace will play to our natural strengths” as a maker of popular movies and TV shows.
“That’s been our strategy for the past 15 years, and whether it’s part of a fat bundle, a skinny bundle or no bundle at all, the bottom line is that people are watching more content ... than ever before,” he said.
Follow Ryan Faughnder on Twitter for more entertainment business coverage: @rfaughnder
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