The cable networks that have helped sustain earnings growth at...
The cable networks that have helped sustain earnings growth at most large media companies in recent years are now showing signs of fatigue, Citi analyst Jason Bazinet wrote investors. Lower audience ratings are the main problem, he said. “While many…
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factors may be at play (Netflix, Nielsen changes, lower quality shows) we have been unable to identify the source of the entire decline,” which has accelerated recently, he said. Bazinet lowered his rating on several media stocks. “As we entered 2012, we were recommending every media stock,” he said. “But beginning late last year, we began to notice the aggregate cable network ratings were falling, and as the months progressed the magnitude of the decline kept getting larger and larger.” Given the drop in audience ratings and the lack of a narrative to explain it, “we thought it would be prudent to reduce our risk to the sector,” the analyst said. “Until we see signs of ratings stabilization, we think it’s prudent to focus investors on the handful of firms that offer compelling value even if the ratings woes persist."