Television Stocks Plunge After AT&T Announces Cord Cutting

eMarketer the online research company says that at the start of 2017, 16.7 million adults in the U.S. had cut the cord and at the end of the year that number would grow to over 22 million.

A day after AT&T, the parent company of DirecTV said it continued to loss subscribers due to people cutting off their cable television and satellite services, a phenomenon called cord-cutting, stock of companies heavily invested across the television industry plunged.

AT&T shares dropped by 6% which helped to drag down shares of its soon to be merger partner Time Warner by 2%.

In one of its regulatory filings, AT&T said that in its recently ended quarter it would be reporting an increase in subscribers of 300,000 to its digital service, but was losing over 390,000 traditional television subscribers, for a 90,000 net loss in subscribers.

While it said there were several reasons, including changing credit standards for its new members and hurricanes, its comment that said video net losses had been driven by the increased competition in traditional pay television markets as well as over the top services.

Stock affected on Thursday by nervous investors included AMC Networks that dropped 7%, Dish Network was down 5%, Discovery Communications, E.W. Scripps and Sinclair Broadcast Group all dropped by 4% and Charter was down 3%.

An analyst on Wall Street said that expecting a drop of 350,000 traditional television subscribers at AT&T for the quarter, but that will be exceeded by more than 40,000.

Cord-cutting is nothing new for those investing in television companies, but many were likely taken aback at the speed in which it is taking place.

On Thursday, the larger and more diversified companies in media-entertainment were even hit as Comcast was down 4%, Viacom fell 3%, Walt Disney was down 2% and CBS and Sony fell 1% each.

Just one of the biggest conglomerates 21st Century Fox eked out a gain but just 0.1%.

Analysts warned that DirecTV was like the rest of its peers suffering from cord-cutting and it was reasonable to believe that a weak quarter would be in store for the entire pay television industry.

Netflix, which is thought to be one of the benefactors of the increase in cord-cutting because former customers of cable and satellite television have flocked to the service, saw shares increase by 1%, which give the business an $84.6 billion market cap that was more than 21st Century Fox, CBS and Viacom combined.

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