Media Stocks Stumble Amid Market Fears About China And Mideast

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U.S. media companies sobered up quickly this morning as Wall Street followed in a global sell-off of stocks. Traders are concerned by new evidence of a manufacturing slowdown in China, and uncertainties about the Middle East after Saudi Arabia severed diplomatic relations with Iran.

Most major companies on our watch list are down this morning — many by a lot. The Dow Jones U.S. Media Index is off 2.0% while the Standard & Poor’s 500 is down 2..2%.

In Big Media, Disney is off 2.3% followed by Fox (-2.3%), Comcast (-1.7%), Viacom (-1.6%), CBS (-1%), and Sony (-0.3%). Discovery is the only one in the plus category, up 0.2%.

DreamWorks Animation is down 7.8%, with an analyst downgrade. B. Riley’s Eric Wold dropped his recommendation to “neutral” this morning saying that he’s “incrementally concerned” the release of Star Wars: The Force Awakens on January 9 in China could cut into sales for DWA’s Kung Fu Panda 3 which opens January 29.

Netflix — the market’s biggest winner in 2015 with shares up 134% — is also a big loser this morning, down 7.2%, also with a downgrade. Baird Equity Research changed his view to “neutral” and cut its price target 10.2% to $115, citing the possibility of weaker than expected growth in subscriptions.

Others battered by today’s market turmoil include Pandora Media (-6.7%), Amazon (-5.4%), Yahoo (-5.0%), Lionsgate (-4.2%), and Facebook (-3.9%).

Exhibition companies also were hit hard after two analysts lowered their 2016 box office forecasts. Stifel Research’s Benjamin Mogil dropped his estimate to -5% from +3%, while MKM Partners’ Eric Handler went to +0.1% from +2%.

Cinemark shares this morning are -4.7% with AMC Entertainment -4.6%, Imax -4.3%, Regal -4.0%, and Carmike -3.9%.

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