Media Stocks Down Again In Wake Of Brexit Vote; S&P Downgrades UK Credit Rating – Update

Associated Press

UPDATED, 1:11 PM Stocks took another beating today as the Dow Jones finished down 1.5%, losing 260 points to 17,140. That was well off the session low of -337, however, and midafternoon trading picked up after Standard & Poor’s downgraded Britain’s credit rating from AAA to AA in the wake of its Brexit vote. Discovery Communications took the biggest hit among Big Media companies, losing nearly 3%, followed by Viacom (-2.4%), Time Warner (-2.1%), Sony (1.9%), CBS (1.5%) and Disney (1.4%). The two-day selloff has sent all of the Big 3 indices — Dow Jones, S&P and Nasdaq — into negative territory for 2016.

PREVIOUSLY, 7:30 AM: Investor concerns about the fallout from the UK’s surprising vote last week to leave the European Union continued to weigh on media companies this morning following Friday’s selloff.

The Dow Jones U.S. Media Index is down 1% in early trading, a bit better than the Dow Jones Industrial Average (-1.6%) and the Standard & Poor’s 500 (-1.8%).

Buyers are especially concerned about upheavals in global trading and sales. The British pound lost about 10% of its value vs. the U.S. dollar on Friday and continued to decline today to $1.3152 — the lowest it has been since 1985. That could reduce the revenues that U.S. media companies see from sales of movie tickets, DVDs and licensed merchandise in Britain, though it also should lower the cost of shows and other products that the UK sells.

Comcast, which collects the vast majority of its revenue in the U.S., is the only Big Media company whose shares are up today — a little under 1%.

Among the others, Viacom (-2.6%) is taking the biggest hit, followed by Sony (-1.9%), Fox (-1.6%), Time Warner (-1.0%), CBS (-0.6%), Disney (-0.8%), and Discovery (-0.9%).

Fox and Discovery were hit hardest on Friday.

Among the broader collection of media companies with major U.S. interests, Netherlands-based Altice — which just bought Cablevision — is off 5.2%. Tronc (the newly renamed Tribune Publishing) is down 4.2%, while Redbox owner Outerwall is -3.6%, and IAC is -3.5%.

Companies down between 2% and 3% include Barnes & Noble, Time Inc., Imax, Netflix, Live Nation, News Corp, AMC Networks (which also touched a 52-week low), and Lionsgate.

Jefferies Equity Research’s John Janedis this morning urged clients to take another look at CBS. Its shares declined 3.8% on Friday even though the UK accounts for just 4% of its revenues “and is fully hedged.”

Erik Pedersen contributed to this report.

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