What’s happening is that the cable and satellite providers are losing subscribers, which means that they are likely to be unwilling to renew their contracts with the media companies at the rates they have been and are now paying. And while movie box office sales are up 5% for the year to date compared with last year, ticket sales are lower at this point than they were in 2013 and only slightly better than sales in 2010 or 2012.
The most disappointed shareholders must be those with a significant stake in Viacom Inc. (NASDAQ: VIAB). Shares began trending down almost exactly a year ago and closed on Tuesday down just over 50% for the past 12 months. A report Wednesday morning in the New York Post notes that investors are now worried about coming contract talks with Dish Network, fearing that Dish will force Viacom to accept a lowball price, which will in turn force Viacom to accept the same low price from other distribution partners.
The second-worst performer over the past 12 months has been Discovery Communications Inc. (NASDAQ: DISCA), which is down about 40%. The company renewed its distribution deal with Comcast in late July, but the terms were not disclosed. But Comcast could not have been too happy with Discovery for the media firm’s opposition to Comcast’s failed takeover of Time Warner Cable. And to add insult to injury, Discovery CEO David Zaslav was the highest paid executive in the United States last year. He received $3 million in salary and stock and option awards of about $145 million.
Shares of Twenty-First Century Fox Inc. (NASDAQ: FOXA) and CBS Corp. (NYSE: CBS) dropped about 25% and 26%, respectively, in the past 12 months. And both have sports-centered cable channels which is where most of the money has been for some time now. The leader here, ESPN, which is owned by Walt Disney Co. (NYSE: DIS), has probably managed to keep the parent company’s stock in the green for the past 12 months. Disney’s shares took a big dip in mid-August, but still have posted a gain of 10% in the past 12 months.
Only Comcast Corp. (NASDAQ: CMCSA) has managed to post a share price gain over the past 12 months, and that gain is less than 1%.
The big winner? Netflix Inc. (NASDAQ: NFLX), with a gain of about 55%, even including some recent dips. Streaming video on demand continues to drive subscriptions at Netflix, as does the company’s own programming. Once viewed by the media companies as a nice addition to their revenue streams, Netflix is now viewed as more of a threat. And no matter what Netflix executives say, the recent loss of Epix content hurts, but it could be that it hurt Viacom, one of the partners in Epix, worse.
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