Did I hear a note of fear in the voices of Big Media CEOs this week when they spoke to Wall Street about the state of television advertising? If it wasn’t, then it was pretty darn close — at least suggesting “uneasiness” or “dismay.” Whatever word you use, it was startling that execs who are famous for their optimism and salesmanship had to acknowledge that there’s trouble in Emerald City. It contributed to a selloff in many media stocks that hadn’t abated by week’s end. The Dow Jones U.S. Media Index fell 1.2% during the last five days even as the Standard & Poor’s 500 increased 0.6% to a record high.

Image (15) David-Zaslav__140507172435-150x150.jpg for post 721186Discovery CEO David Zaslav appeared to kick things off on Tuesday. His company lowered its financial guidance for the rest of this year. Then, talking about ad sales, he acknowledged that “there is no question that last month things have slowed.” The kicker: He can’t say that the market’s about to improve.  Advertisers “are holding their wallets closer. … We can’t really tell where it’s going right now.”

That comment — followed by similar, if often couched, comments from other CEOs — provided ammo for a narrative gaining ground among smart investors that the television business has peaked. Part of the story involves the steep drop in the ratings, which stood out in cable in the opening weeks of the current primetime season. Year-over-year ratings were down 12% in October, 13.5% in September and 14.9% in August, Nomura analyst Anthony DiClemente found.

How have networks dealt with that? In many cases, simply by stuffing shows with more ads. “Discovery, Viacom, Time Warner and 21st Century Fox’s cable networks sold +7% to +11% more commercials in 3Q 2014 vs. 3Q 2013,” MoffettNathanson Research’s Michael Nathanson observed last month using TiVo data.

But execs can’t continue to use such Band-Aids. TV’s ability to control the supply of advertising “is going away, thanks to the endless potential supply of video inventory on the Internet,” Morgan Stanley noted in a deep-dive report this week. As a result, the firm predicts “slow but steady leakage of the traditional TV ecosystem’s video advertising revenue [market] share” heading to 2020.

Chase-Carey_20110715233131Investors expected media moguls to argue this week that the weak ad market is a blip, not evidence of a fundamental shift of dollars to digital platforms including YouTube. Most did just that — and also heaped blame on Nielsen for failing to count viewers on mobile devices.

Fox co-COO Chase Carey called concerns about TV ads “overblown, particularly in the short term.” Buyers cut spending recently “due to a lack of confidence” in the economy, he said. (The observation sounded strange in a week when the Labor Department reported that the unemployment rate fell in October to 5.8%, the lowest it has been since July 2008, and stocks closed at record highs.) To the extent that advertisers are buying digital, “it’s a pretty modest shift.”

Comcast offered a similar, if slightly more muddled, message. CEO Brian Roberts acknowledges that “clearly there is a shift to digital.” Still, the recent weakness in sales mostly shows that advertisers want to keep their powder dry for now. “Digital can’t deliver the same kind of emotional, attitude-adjusting advertising that a 30-second television spot can,” he said. Even though advertisers like the flexibility that digital platforms offer to target sales pitches, “they also realize when they have big product to get out into the market that they need television.” The scatter market, where sales are taking place, “is just fine.”

Image (4) les-moonves-2014__140609040812.jpg for post 742271CBS’ Les Moonves took a slightly different tack that could comfort his shareholders. “While broadcast as a whole is having a solid season, basic cable is not doing as well,” he says. “So any share shift towards digital is coming primarily at the expense of cable and print. … We don’t think the advertising that’s going digital affects the 20M-viewer programs like we [have]. We think it affects more of the niche businesses that we’re not in.”

But the industry isn’t marching in lock-step on the issue, as Disney CEO Bob Iger showed yesterday. “There is no question that some money has siphoned out of traditional media and onto digital platforms,” he said. He could speak with authority because “we are an advertiser, and a substantial component of our advertising buys, particularly [for] the studio and our theme parks, is digital. … Digital has become a large component of most advertising campaigns. And that came from somewhere.”