On a rough day for Wall Street, especially the Nasdaq, media and tech stocks were hit harder than many other sectors. A large swath of the industry endured stock drops of 5-10% on the day — for many companies, those single-day losses were among their steepest of 2018.
AT&T, which delivered mixed earnings news this morning, especially for its DirecTV satellite business, had its shares trimmed by more than 8% on the day. Netflix surrendered 9%, while the two largest traditional media players, Comcast and Disney, shed 4% and 5%, respectively. Other major declines included Lionsgate at 9%, Viacom at 8.5%, Amazon at 6%, Discovery at 9% and CBS at 5%. The “best” tallies in the group included 21st Century Fox, which stepped back just 2%, and Google parent Alphabet, off less than 3%.
The broad selloff accelerated during the final hour of trading, leaving the S&P 500 and the Dow Jones Industrial Average in negative territory for 2018 to date and the Nasdaq officially in a correction. The 329-point slide by the Nasdaq was the third-biggest in its history, though in percentage terms the 4.4% downturn was not nearly as dire.
No single cause emerged as the culprit, though earlier wobbles for the markets this month suggest worries over rising interest rates, trade wars and the overextended rally this decade all could be playing a role. The mailing of explosive devices to CNN, the Clintons, George Soros and Barack Obama also was mentioned as potentially unnerving investors.
Michael Nathanson of Wall Street research firm MoffettNathanson, cited the troubles of the broader media sector in a note about WarnerMedia’s third-quarter results. The selloff, he wrote, “is likely not driven by WarnerMedia as much as DirecTV’s reported 5.2% decline in satellite subscribers (adjusted for estimated Hurricane Maria impacts) and the fact that DirecTV Now has essentially stopped growing.” (DirectTV Now added just 49,000 subscribers in the period, one-sixth the 296,000 it brought aboard in the prior-year quarter and far below analysts’ consensus forecast.)
“If this trend is indicative of the inability of growing vMVPDs to offset the decline of traditional MVPDs in the quarter,” Nathanson added, “the recent stabilization of Pay TV might be very short-lived.”