Cracks in the cable business send media stocks tumbling

[J187Money]

J187, I have read through this thread and I follow you on everything but this post, which implies a complete hopelessness for consumers. In short, your point is that even in the rare instances where consumers can impact a company it is still pointless. I can only gather that you are an investor, or otherwise work in financial services, because you have completely divorced the concept of owning stock in a company from having any responsibility for its actions. Owning stock does not entitle you to profits without also generating culpability for the company's actions. To carry forward your failed Sea World example, of course the shareholders should have been the target. They chose the board who hired the management that rounds up wild orcas, houses them in solitary tanks, and has them do flips in a stadium. And for the random worker, there are other entertainment options in Florida where the tourism money will move - I am sure they will find a job (not that your primary concern was the worker at Busch Gardens anyway).

Not pointless. Just that if you want to hurt X, it is often Y that gets hurt. The way the world actually operates there is very little to do in the way of firing directly at your target. That's all I'm saying.

For example, if you are a Nielsen house and a UCONN fan and you had your TV on 100pct to ESPN until we got stuck in the AAC and then changed over to the Disney Channel or ABC you might feel better but you haven't accomplished anything. Or the fact that one trip to Disneyworld probably outweighs a lifetime of cable fees to ESPN.

And nobody worries about the random worker. Until it is them.

 

[J187Money]

As an example, I was in the music industry for a long time. You know who got hurt by piracy?

- artists who were no longer being paid for their work
- artists who couldn't get signed because A&R money dried up
- tons of low and mid level record company folks that got fired / outsourced / etc

If record companies were evil, you would assume that you would want to hurt those at the top. They all prospered. The people that were hurt the most were working stiffs and the people that actually created the music.

But people felt justified stealing music because record companies were evil.

 

[WestHartHusk]

Not pointless. Just that if you want to hurt X, it is often Y that gets hurt. The way the world actually operates there is very little to do in the way of firing directly at your target. That's all I'm saying.

For example, if you are a Nielsen house and a UCONN fan and you had your TV on 100pct to ESPN until we got stuck in the AAC and then changed over to the Disney Channel or ABC you might feel better but you haven't accomplished anything. Or the fact that one trip to Disneyworld probably outweighs a lifetime of cable fees to ESPN.

And nobody worries about the random worker. Until it is them.

You missed my point entirely...you used the SeaWorld analogy to say that the 'wrong' people (shareholders) got hurt. My point is that they are the right target, they own the company and dictate that companies strategic decision. With regard to the second paragraph, I have no idea what you are talking about - who on here was saying that they switched from ESPN to ABC. I think they were saying they switched from ESPN to nothing, which, if they were a Nielsen household, is accomplishing something.

As an example, I was in the music industry for a long time. You know who got hurt by piracy?

- artists who were no longer being paid for their work
- artists who couldn't get signed because A&R money dried up
- tons of low and mid level record company folks that got fired / outsourced / etc

If record companies were evil, you would assume that you would want to hurt those at the top. They all prospered. The people that were hurt the most were working stiffs and the people that actually created the music.

But people felt justified stealing music because record companies were evil.

Piracy is theft, so I am not sure what point you are making here. I don't think anyone was advocating stealing from ESPN.

 

[J187Money]

You missed my point entirely...you used the SeaWorld analogy to say that the 'wrong' people (shareholders) got hurt. My point is that they are the right target, they own the company and dictate that companies strategic decision. With regard to the second paragraph, I have no idea what you are talking about - who on here was saying that they switched from ESPN to ABC. I think they were saying they switched from ESPN to nothing, which, if they were a Nielsen household, is accomplishing something. Piracy is theft, so I am not sure what point you are making here. I don't think anyone was advocating stealing from ESPN.

You missed my point. PETA wants the humane treatment of animals. That's it. That is their goal. Encouraging people not to go to the parks in their mind will the Sea World to change their ways. Sure the shareholders get hurt if profits decrease. But that isn't their aim. If management did what PETA wanted and the shareholders made money PETA wouldn't care. What happens to them is tangential. Not to say that they might deserve what they get. But go read PETA's objectives on Sea World and tells me where it says they are out to punish shareholders.

My second point was that in order to hurt ESPN you need to hurt Disney. Not watching ESPN if you spend money on other Disney products results in ESPN not being hurt at all. That's a straw man argument that I was making, but I wonder if an ESPN hater would not take his family to Disneyworld, when the amount of money that is spent there will benefit the empire far more than ESPN loses in one subscriber.

My point on music is that consumers felt they were aiming at something and someone else got hurt. Which is my overall point. Sometimes the collateral damage deserves it. Sometimes they don't. But yes, the way corporate America is set up there is very little you (as an individual or a small group) can do to affect change on a major scale.

 

[pj]

Boycotting ESPN will end up hurting ESPN in its future cable negotiations. The cable companies know what channels are being watched and how many people would complain if they dropped a channel.

And a boycott is a perfectly rational and appropriate response to misbehavior. ESPN makes $120 mn per year in subscriber fees from the people of Connecticut. If they lost enough patronage in Connecticut that the cable companies could bargan down the fee $1 per month per household, it would pay for UConn to the ACC.

The squeaky wheel gets the grease. If ESPN is merely a profit-seeking machine, then it's the responsibility of the people of Connecticut to make it profitable for ESPN to help UConn. A boycott would do that.

 

[billybud]

By all means boycott in Connecticut....

It will only affect the numbers...Connecticut folks aren't much interested in live sports broadcasting (that's what the numbers will say if there was a decline)...not why.

Which makes UConn a less attractive target.

 

[J187Money]

Boycotting ESPN will end up hurting ESPN in its future cable negotiations. The cable companies know what channels are being watched and how many people would complain if they dropped a channel. And a boycott is a perfectly rational and appropriate response to misbehavior. ESPN makes $120 mn per year in subscriber fees from the people of Connecticut. If they lost enough patronage in Connecticut that the cable companies could bargan down the fee $1 per month per household, it would pay for UConn to the ACC. The squeaky wheel gets the grease. If ESPN is merely a profit-seeking machine, then it's the responsibility of the people of Connecticut to make it profitable for ESPN to help UConn. A boycott would do that.

If everyone did it. But since we can't fill the stadium we can get everyone to cut the cord? Doubtful. But agreed it would be meaningful if you could pull it off.

 

[WestHartHusk]

You missed my point. PETA wants the humane treatment of animals. That's it. That is their goal. Encouraging people not to go to the parks in their mind will the Sea World to change their ways. Sure the shareholders get hurt if profits decrease. But that isn't their aim. If management did what PETA wanted and the shareholders made money PETA wouldn't care. What happens to them is tangential. Not to say that they might deserve what they get. But go read PETA's objectives on Sea World and tells me where it says they are out to punish shareholders.

My second point was that in order to hurt ESPN you need to hurt Disney. Not watching ESPN if you spend money on other Disney products results in ESPN not being hurt at all. That's a straw man argument that I was making, but I wonder if an ESPN hater would not take his family to Disneyworld, when the amount of money that is spent there will benefit the empire far more than ESPN loses in one subscriber.

My point on music is that consumers felt they were aiming at something and someone else got hurt. Which is my overall point. Sometimes the collateral damage deserves it. Sometimes they don't. But yes, the way corporate America is set up there is very little you (as an individual or a small group) can do to affect change on a major scale.

J, I think we are coming from opposite ends but agree...it is possible, but difficult, to influence a corporation.

 

[Husky25]

The classic example would be coffee, many loathe either Dunkin or Starbucks for what they perceive the other brand stands for - whether its really true or not.

Good analogy about ESPN, but I feel it needs to be taken a step further. Some people avoid either Dunkin' Donuts or Starbucks (or both) because consumers just feel they serve an inferior product. This is the class I am in. I think Starbucks coffee is awful and the counter help needs to get over themselves. So I'll choose Dunks every single time over them. On the other hand, I'll chose a local mom & pop over Dunks as well.

I have a similar opinion about ESPN, at least about the SportsCenter and .com content. I'll always tune in for live UConn content, but for Sports news, I'll watch CSNNE, Fox or CBS.

 

[J187Money]

J, I think we are coming from opposite ends but agree...it is possible, but difficult, to influence a corporation.

Right. Circumstances matter. A lot. Way more than the quality of the argument.

I know I'm being a bit pedantic and making technical intellectual arguments, but that's what I do for a living so it is hard to turn it off.

 

[J187Money]

I also don't really think we disagree that much at all.

 

[UConn9604]

The reset started on August 4 after Disney reported second quarter earnings that were impressive in many respects, but included concerning news about its biggest profit engine, the sports network ESPN.

Subscriber revenue from ESPN isn't growing as fast as it used to, partly because a small number of households have stopped paying for a monthly bundle of cable channels.

http://money.cnn.com/2015/08/20/media/media-stock-drop-disney/index.html

 

[whaler11]

I didn't have time to look yet how it closed but Disney was getting destroyed at lunchtime.

 

[BarkingDog]

I didn't have time to look yet how it closed but Disney was getting destroyed at lunchtime.

Not that I own any, but I was curious to find the answer to your question. This from the LA Times. The last graph, a quote from an analyst, is telling.


Major media stocks took another hit Thursday on renewed concerns about the state of the television business and broader market declines, two weeks after comments from the Walt Disney Co. set off a widespread sell-off.

Disney's stock fell $6.43, or 6%, to $100.02 by the close of trading on Wall Street, its biggest drop since Aug. 5.

The Burbank-based entertainment giant's shares are still up about 11% during the last 12 months.

The dip followed a downgrade of the stock to "market-perform" from "outperform" by Bernstein Research analyst Todd Juenger, who cited declines in pay-TV subscriptions and TV advertising revenues.

Investors fear that traditional media companies will continue to grapple with changing viewer habits as the unraveling of the pay-TV bundle accelerates, and so-called cord-cutting and cord-shaving increases.

Juenger gave a similar downgrade to Time Warner Inc., which owns the Turner cable networks including CNN, TBS and TNT. Time Warner's shares were down $3.92, or 5%, to $73.90 at the closing bell.

"When an industry is undergoing a massive structural upheaval [...] investors won't wait for final conclusive evidence to reevaluate how much they are willing to pay for the existing status quo cash flow streams," Juenger wrote in a research report.

Financial markets generally took a beating Thursday.

The S&P 500, Dow Jones industrial average and Nasdaq indexes all fell more than 2%. Even Netflix, which is well positioned for the migration of viewers away from long-standing pay-TV providers, fell nearly 8% for the day.

Major media stocks, in particular, struggled on the down day.

Viacom Inc. ended the day down 6%, 21st Century Fox fell more than 4%, Lionsgate finished almost 4% lower and Comcast Corp. slipped 2.5%.

Long-simmering concerns about declining pay-TV subscriptions came to a boil earlier this month when Disney warned investors that profit from ESPN and other cable channels would not be as robust as initially thought.

The comments triggered a wider decline among top media stocks that wiped out more than $50 billion in market value in two days.

"We understand, and in fact agree, with the market's decision to fast-forward to the inevitable conclusion and start valuing these businesses as if they are declining assets," Juenger said. "In practice, this means increasing the risk applied to an increased cord-cutting scenario."

 

[Dooley]

As an example, I was in the music industry for a long time.

I've had my suspicions for a while but this confirms it for me...you are Eddie Money, aren't you?

 

[CAHUSKY]

I've had my suspicions for a while but this confirms it for me...you are Eddie Money, aren't you?

If so, great show at the ASAE Annual Meeting & Expo last week. I enjoyed it.

 

[Waquoit]

If so, great show at the ASAE Annual Meeting & Expo last week. I enjoyed it.

One of my favorite shows ever at the West Hartford Agora.

 

[J187Money]

I feel old but I'm not that old.