Comcast will kick off the Q2 earnings season Thursday morning and while many eyes will be on whether the nation’s largest cable company will address rumors it is contemplating buying a smart TV manufacturer, more important to the industry will be how it measures up to broadband subscriber growth targets.

Reports surfaced Wednesday that Comcast has had talks with smart TV companies Vizio and TP Vision about possible acquisitions. While the seriousness of those talks is debatable, Protocol said discussions with Vizio were held in 2021 and in early 2022, but that it was "unclear how far the discussions with each company progressed, or whether they are still ongoing." Of more imminent importance will be whether the tone for the rest of the year concerning broadband growth will be better or worse.

Comcast’s results will come on the heels of somewhat mixed Q2 reports from top telco competitors AT&T, Verizon and T-Mobile. AT&T’s fiber broadband adds topped 316,000 in the period, one of its strongest showings ever but not enough to offset 341,000 IP broadband losses in the quarter. Verizon added 256,000 fixed wireless customers in Q2, but 36,000 additional Fios broadband customers missed analysts’ estimates.

T-Mobile, which earlier said it would shell out about $500 million -- $350 million directly to customers -- for a 2021 data breach, added 560,000 fixed wireless broadband customers in Q2, topping even the most optimistic estimates.

After several quarters of record subscriber growth during the pandemic, Comcast and the rest of the cable industry saw what was once the runaway high speed data train come to a near halt. After nearly 2 million additions in 2020, Comcast’s performance slowed in 2021 to 1.3 million additions. So far this year it managed to outpace consensus estimates for Q1, reporting 262,000 broadband additions for that period -- consensus was for around 230,000 additions. But most analysts expect growth to slow to a crawl in Q2 -- most have Comcast adding less than 100,000 high-speed data customers in the period, which would be its lowest quarterly broadband subscriber growth since Q2 2009.

Also: Cable’s Broadband Slowdown Hasn’t Hit Bottom Yet, Analyst Says

MoffettNathanson senior analyst Craig Moffett estimates that Comcast will add about 91,000 high-speed data subscribers in Q2, compared to 354,000 additions in the same period last year. Wells Fargo Securities media analyst Steven Cahall expects even more sluggish performance -- he predicted Comcast would add just 50,000 broadband customers in the period -- while Barclay’s media analyst Kannan Venkateshwar was slightly more optimistic, estimating the cable operator would add 74,000 broadband customers in the period.

Comcast isn’t alone. The analysts also have lowered expectations for the rest of the sector. For Charter Communications, which is due to report Q2 earnings on July 29, Moffett is most optimistic, estimating Q2 broadband additions will be 90,000, while Cahall predicts they will fall to 15,000 and Venkateshwar believes they will be flat for the period.

"We continue to expect Cable net adds to slow through 2022 (and beyond), driven primarily by an acceleration in fiber and fixed wireless growth," Cahall wrote in a July 25 report. "We've seen the composition of quarterly net add growth drastically shift over the past year, with fiber and fixed wireless expected to account for much of the growth in 2Q, offset by declining legacy Telco DSL subs and modest Cable additions."

At Altice USA, which according to some reports hired Goldman Sachs to shop its Suddenlink systems to the highest bidder, is scheduled to release Q2 results on August 3, Moffett expects the past trend of broadband losses to continue for the operator, estimating it will shed 9,000 broadband subscribers in the period. Cahall predicts Altice USA will lose 22,000 broadband customers, while Venkateshwar is close behind with an estimate of 20,000 in losses. ■

A day after AT&T shares tanked after reducing free cash flow guidance for the year, rival telco Verizon Communications watched its stock near its four-year low on Friday after telling investors it, too, won’t meet its earlier financial targets.

Verizon shares fell as low as $44.38 each, down 7% or $3.28 per share. The decline came after Verizon said in its Q2 earnings release that it would reduce full-year cash flow guidance from 2%-to-3% growth to a 1.5% decline, and earnings per share would be in the range of $5.10 to $5.25 per share instead of earlier targets of $5.40 to $5.55 per share. In addition, Verizon said wireless service revenue would grow 8.5% to 9% for the year, instead of 9% to 10%, while other service revenue should be down 1% to flat, below earlier targets of flat growth.

The guidance reduction comes after AT&T said on Thursday it would miss its previous full year free cash flow target, sending its stock down as much as 10% for the day. Shares closed July 21 down about 7%, and fell another 3% on Friday.

The missed guidance for Verizon compounded what was a disappointing quarter for the telco. Verizon added 268,000 broadband customers, 256,000 of which were fixed wireless subscribers. Fios additions at 36,000 for the period were below some analysts estimates of 45,000 additions. But the company also reported it lost 215,000 postpaid wireless customers in the period, more than four times some analysts estimates of a loss of 60,000 customers. In a research note Friday, Barclays Group media and telecom analyst Kannan Venkateshwar, who earlier in the day lowered his rating on AT&T to “equal weight” from “overweight” and reduced his price target on the stock to $20 per share, said Verizon’s wireless performance could potentially make the first half of 2022 its worst ever.

“More importantly, there isn’t an easy path to turning this around given the company’s market positioning as the highest priced provider in a saturated market with growing low-priced competition and increasingly challenged macro backdrop,” Venkateshwar wrote. “Not surprisingly, the company announced a lower priced entry tier recently but this may merely turn out to be a tool to offset elevated churn due to recent price increases across the entire base, the impact of which is likely to be seen in 3Q.” ■

Shares in AT&T were down nearly 11% on Thursday (July 21) after the telecom giant said its free cash flow guidance for the year would be lower than expected. That, coupled with a loss of 25,000 total broadband customers in Q2, wasn’t enough to offset near-record growth in its fiber division.

AT&T shares fell to $18.24 per share in early trading on Thursday, down 10.9% or $2.24 each. While the stock rose slightly in later trading — it was priced at $18.61 per share at 10:40 a.m.—- driving the decline was the company’s decision to reduce full-year free cash flow guidance to “the $14 billion range” to reflect heavier investment in growth. Previous guidance was for about $16 billion in free cash flow for the year. The stock closed July 21 at $18.93 each, down 7.6% or $1.55 per share.

“Our results the last eight quarters demonstrate that our deliberate strategy of focusing on growth is helping us gain valuable customer relationships, and we’re confident in our ability to maintain this momentum while also continuing to reduce debt and deliver an attractive dividend,” the company said in a press release.

Consolidated revenue was down 17.1% to $29.6 billion, mainly due to the separation of its DirecTV video business in Q3 2021. Excluding that deal, revenue was up 2.2% in the quarter. AT&T completed the spin-off of its WarnerMedia business in a deal with Discovery Inc. valued at $43 billion in April.

AT&T managed to beat its own estimates for fiber growth, 316,000 compared to guidance for 275,000 additions. But steeper losses in its IP broadband business — 341,000 vs. company estimates of a 275,000-customer loss — pushed overall broadband subscriber performance into the red. For the period, total broadband losses were 25,000 customers.

AT&T said it now has about 6.6 million fiber broadband customers — up by 2.3 million customers from two years ago — and is available in 18 million locations in more than 100 metro areas in the U.S.

Wireless subscriber growth at 813,000 bested analysts’ consensus estimates of 542,000 additions. Consumer wireline revenue rose 1.1% in the period, driven mainly by fiber broadband increases (revenue was up 28%), offset by non-fiber broadband revenue declines of nearly 10%.

Business wireline revenue fell by 3% in the period, while EBITDA at the unit was down 14% year-over-year. ▪️

AMC Networks reported higher profit in the second quarter as lower losses in its international operation offset declines at its U.S. networks.

Net income rose 3% to $106 million, or $1.82 a share, from $103 million, or $1.54, a year ago.

Revenue rose 7.2% to $761 million.

At the company’s national networks in the U.S., including AMC, We TV, Sundance TV, IFC and BBC America, operating income was down 0.8% to $210 million. Programming expenses rose including a $4 million write-off of programming assets.

Related: AMC Networks Sets Senior Programming Leadership Team

Revenue rose 3.7% to $627 million. Distribution revenue increased 5.8% to $380 million. Advertising revenue edged up 0.6% to $247 million despite lower ratings.

The company cut the operating losses at its international and other segment by 673.7% to $11.3 million. International revenue rose 32.4% to $146.7 million.

Other revenue was up by $30 million because of the acquisition of Levity Entertainment Group.

“We continued to deliver solid financial and operating results in the second quarter, growing revenue and adjusted operating income; generating strong free cash flow; and using our capital to position the business for the long-term,” said CEO Josh Sapan. 

“Our recent transactions related to RLJ Entertainment and Levity are strategically consistent with several of our larger goals, including furthering our interests in ad-free direct-to-consumer businesses that we own and control, through RLJ Entertainment’s growing Acorn TV and UMC SVOD services, and content ownership," he added.

Related | broadcastingcable.com: AMC Acquiring Johnson’s RLJ Entertainment for $65M

Sapan noted that as an independent programmer, the company’s content and networks were carried by the most virtual MVPDs, including AT&T’s Watch. AMC Networks's total number of subscribers is up 2% from a year ago at a time when cord-cutting is reducing pay-TV customers.

“In an environment that is rapidly changing, our strong track record, along with our size and our attractive price to distributors, will enable us to continue operating from a strong competitive position, take advantage of growth opportunities, and create value for shareholders," Sapan said.

With all of the major media companies that own TV networks having reported their latest financial results, analyst Brian Wieser of Pivotal Research calculated that national advertising was down about 1% during the second quarter.

While the second-quarter loss was an improvement on the first quarter's 3% decline, “a generally flat to slightly negative advertising environment should persist for the foreseeable future,” Wieser said in a note.

During earnings calls, Wieser said, executives talked about strong pricing in the scatter market, changes in audience measurement and advances in audience targeting as reasons to be optimistic about future ad revenue growth.

Related: Fox Seeing Big Gains in Non-Linear Advertising Sales

But Wieser isn’t buying it. He tackled those arguments in his note, one by one:

“Pricing does not necessarily reflect changes in demand.”
Weiser noted that ad sales execs have more information about their inventory, giving them advantages in negotiations with buyers, who usually want spots in specific shows. Some scatter advertisers pay higher prices for their advertising because they are newer advertisers, automatically resulting in scatter prices that are higher than upfront price.

“Advertisers already know that not all viewing is measured.”
Wieser said a measurement system that increases viewership by 5% won’t be accepted by buyers unless it comes with a 5% discount in price.

“New forms of audience targeting help media owners identify different value for their inventory, but won’t cause most advertisers to change how they budget for the medium, either.”
Large advertisers have TV budgets that probably won’t change, even if more of their TV budgets are spent on more targeted products, Wieser said.

The changes media executives are talking about won’t affect TV, Wieser said. And the large advertisers that dominate TV are mostly losing sales to newer competitors and looking to cut costs. New TV advertisers are not coming along to replace older ones.

“We don’t see many new categories of marketers emerging who drive TV – those who are large, consumer-focused, differentiate themselves on the basis of awareness of attributes, budget on a share-of-voice basis and operate in nationally oriented and oligopolistic sectors,” Wieser said. “Towards these ends, we don’t see a rebound in growth for traditional national TV advertising any time soon.”

21st Century Fox reported lower fourth-quarter profit despite gains at its cable programming operations.

Net income fell 16% to $476 million, or 26 cents a share, from $567 million, or 30 cents a share.

Revenue rose 2% to $6.75 billion in the quarter.

Earnings were a hair above Wall Street forecasts, but revenue fell short.

Operating income increased 19% to $1.44 billion at the company’s cable network programming unit. Revenue rose to $4.329 billion from $3.921 billion.

Domestic affiliate revenue rose 10% on increased rates at Fox News Channel, FX, FS1 and the regional sports networks.

Related: Fox News, ‘Game of Thrones’ Stay Hot in Weekly Cable Ratings Race

Domestic advertising revenue was up 6% because of higher ratings at Fox News and increases at National Geographic Channel.

At Fox’s television unit, which includes the Fox Broadcasting Co., fourth-quarter operating income fell by $7 million to $137 million. Revenue dropped to $137 million from $144 million.

National and local advertising was down, offsetting gains in retransmission payments. Expenses were 3% lower because of lower entertainment programming costs.

Read more at broadcastingcable.com.

AMC Networks reported higher profits in the second quarter as revenue rose at its domestic cable networks.

Second-quarter net income rose 34% to $103 million, or $1.54 a share, from $77 million, or $1.05 a share. Revenue rose 3.8% to $711 million.

While revenue was lower than expected, the earnings topped Wall Street forecasts.

“Our financial and operating performance in the second quarter and for the year, thus far, has been strong, and we remain on track to deliver on our full-year total company outlook,” CEO Josh Sapan said.

“The success of our long-term focus on investing in marquee content and in distinctive, vibrant brands that attract passionate and engaged fans is reinforced by our wide distribution on new virtual MVPDs, including most recently YouTube TV,” Sapan said. “We continue to partner with our traditional distributors on innovative initiatives that support the cable ecosystem, including our new AMC Premiere offering to Comcast Xfinity TV customers and our AMC Studios co-production partnership with Charter.”

Operating income at the company’s national networks, including AMC, SundanceTV, IFC and BBC America, was up 11.9% to $211.6 million. Revenue rose 5.6% to $605 million. Distribution revenue rose 7.8% to $359 million. Advertising revenue was up 2.6% to $245 million.

Losses at the company’ s international operations grew to $31 million from $8 million a year ago.

The second-quarter results include the impact of impairment charges of $17 million related to AMCNI-DMC, the company’s Amsterdam-based media-logistics facility.

Time Warner, preparing for its acquisition by AT&T, said its second-quarter profit was up 11% as subscription revenue rose at Turner and HBO.

Net income rose 10% to $1.06 billion, or $1.34 per share, from $952 million, or $1.20 per share, a year ago. Revenue rose 5% to $7.3 billion.

The results topped Wall Street forecasts.

Time Warner said it continues to expect the AT&T deal to close before the end of this year. The company also reaffirmed its full-year earning guidance.

At Turner, revenue rose 3% to $3.1 billion. Subscription revenue was up 13%. Operating income was down 7% to $1.1 billion because of higher expenses. Programming costs were up 12% mostly because of the new licensing deal with the NBA.

Turner's advertising revenue was down 6%, and content revenue was down 8%. The company said not having the NCAA Championship and Final Four games this year cost it 8% worth of ad revenue. It also had two fewer NBA playoff games and lower ratings at its domestic entertainment networks. Ad revenue increased at CNN and Turner’s international networks.

Related > Turner’s Martin: ‘We Need Fans, Not Viewers’

At HBO, operating income increased 10% to $531 million as programming costs declined 3%. Revenue rose 1%, with subscription revenue up 8%, while content and other revenue was down 44%.

“We’re very pleased with our first-half results, which keep us on track to achieve our objectives for the year,” said CEO Jeff Bewkes. “Our performance is a result of the continued successful execution of our strategic objectives – with the strong subscription revenue growth at Home Box Office and Turner a great example of this – along with the investments we’re making in our brands and high-quality video content.”

Related > TCA17: Turner’s Kevin Reilly Says Consolidation Will Whittle Down Cable Channels

Warner Bros. operating income was down 28% to $233 million from last year when Flixster was sold. Adjusted operating income was up 20% to $261 million. Revenue rose 12% to $3 billion as higher theatrical revenues were partly offset by lower TV revenue.

Bewkes noted the box office numbers for the films Wonder Woman and Dunkirk, and the Emmy award nominations earned by HBO and Warner Bros.

“These results and accolades reflect strong execution and the investments we’ve been making, both in the best content and in ensuring that we deliver our content across platforms to offer engaging experiences for our audiences,” he said. “Accelerating our pace of innovation and being able to connect more directly with consumers are among the exciting reasons for our proposed merger with AT&T, which remains on track to close before year-end, pending regulatory review and consents.”

While making the announcement that Discovery Communications had agreed to buy Scripps Networks Interactive, the two companies released second- quarter financial results.

Discovery said its second-quarter net income dropped 8% to $374 million. The company attributed the downturn to currency fluctuations, losses from equity and solar investments. Earnings per share were 64 cents, down from 66 cents a year ago.

Revenue at Discovery rose 2% to $1.745 billion.

At Discovery’s U.S. networks, operating income rose 4% to $567 million. Revenue rose 2% to $890 million.

Distribution revenue was up 4%, while ad revenue hit $472 million, flat versus $471 million a year ago.

Scripps Networks Interactive’s preliminary results for the second quarter shows income from operations before income taxes were $400.8 million, up 20.8%.

Read more at B&C.

NBCUniversal posted a big increase in profits in the second quarter, as distribution revenue increased at its cable and broadcast TV networks.

Parent company Comcast said NBCU’s adjusted earnings before interest, taxes, depreciation and amortization rose 22.6% to $2.071 billion. Revenue increased by 17.3% to $8.331 billion.

At the NBCU cable networks, earnings rose 11.7% to $1.055 billion as revenue rose $5.1% to $2.7 billion. An 8% gain in distribution revenue offset lower ad revenue, which was down 0.9% because of lower ratings.

NBC’s broadcast operations increased profit by 5.5% to $416 million. Revenue was up 5.3% to $2.241 billion. Distribution and other revenue was up 36.1% because of higher retransmission-consent fees. Advertising revenue was down 1.2%.

Overall, Comcast’s second-quarter net income rose 24% to $2.513 billion, or 52 cents a share, from $2.028 billion, or 41 cents per share, a year ago. Revenue rose 9.8% to $21.165 billion.

At Comcast’s cable business, earnings rose 5.4% to $1.956 billion in the quarter as revenue rose 5.5% to $13.12 billion.

The MSO’s total number of video subscribers fell by 34,000. The company added 175,000 high-speed internet customers. Phone customers were down by 22,000.

Total customer relationships rose by 114,000, the company said.

Read more at broadcastingcable.com.

With Netflix slated to release its second-quarter results on July 17, analysts are already chiming in with their predictions, with two influential stock pickers expecting strong subscriber growth for the SVOD pioneer.

In separate reports this week, UBS Securities media analyst Doug Mitchelson and Morgan Stanley media maven Ben Swinburne wrote they expect Netflix’s domestic subscriber growth to rebound to 600,000 or more additions in Q2, a turnaround from the 162,000 additions in the same period last year.

Related: Netflix Ranks Among Top Four in ‘Must Keep TV’ Rankings

Last year’s Q2 was marred by what Netflix said were unfavorable press reports that focused on an expected price increase. Last year, Netflix “un-grandfathered” early subscribers, which raised charges for many long-time customers by $2 per month.

With that behind it, both Mitchelson and Swinburne expect a return to robust growth rates.

Related: Netflix Forecast to Hit 128M Subs by 2022

In his report, Mitchelson predicted Netflix would add 600,000 domestic and 2.6 million subscribers in the quarter, in line with company guidance. He added that he expected the momentum to continue into the seasonally strong third quarter, with domestic subscriber rolls increasing by 640,000 and international customers rising by 3.5 million.

“It’s still all about the subs,” Mitchelson wrote, adding that he was slightly concerned about a lighter original programming slate in the period – five new titles compared with 10 in the previous year.

Related: Live TV Viewing Falls in First Quarter: Nielsen

Swinburne was equally optimistic about subscriber growth – he estimated U.S. customers would rise by 600,000 and international subs by 2.6 million. He predicted Q3 U.S. additions would be 630,000 in Q3 and 3.25 million internationally.

In his note, Swinburne wrote that Netflix has doubled the book value of its content assets in less than two years to about $11 billion, more than that of traditional programmers like AMC, Viacom, Discovery and Scripps Networks combined. He noted that traditionally film and TV groups (including Time Warner) turn $1 of content book value into between $2 and $4 of revenue, compared to Netflix at $1 of revenue for every $1 of content book value.

“Our current estimates for revenue and content spend imply that the roughly 1:1 ratio for Netflix remains in the long-term, supporting a profitable and high return on net operating assets (RNOA) business,” Swinburne wrote. “However, these admittedly imperfect comps point to the potential for materially higher earnings power than the market appreciates today.”

After a seasonally weak second quarter, analysts and investors hope better broadband subscriber results and continued improvement in basic video-customer growth in the third quarter will lead to better days for the sector.

Pay TV took a beating in the second quarter, as steady basic subscriber performance by cable companies was off set by greater telco and satellite losses. Like the previous period, the third quarter also is seasonally weak, as students return to campus in September, but analysts are optimistic that stronger broadband growth will off set any video declines.

“The good news about Q3 which, like Q2, is a seasonally weaker time of the year (all the additions are weighted to September) is that whatever the results, Q4 trends should be seasonally stronger, so they will likely be able to point to solid Q4 trends,” Pivotal Research Group CEO and senior media and communications analyst Jeff Wlodarczak said. “The overall focus, though, for cable investors should be on data subscriber results, which is clearly the key in the cable investment thesis.”

EARNINGS CALENDAR

Comcast, Time Warner Cable and Charter Communications are slated to be the first two out of the box with third-quarter results — Comcast is scheduled to release earnings on Oct. 27 with Time Warner Cable and Charter following on Oct. 29.

Both cable giants managed to report strong second-quarter customer growth — Comcast reduced its basic-video losses to 69,000 from 144,000 in the year-ago period, while keeping broadband customer additions relatively stable (180,000 in Q2 2015 vs. 203,000 in Q2 2014.)

Time Warner Cable, which is currently winding through the regulatory approval process in its $78.7 billion merger with Charter, reported some of its best quarterly subscriber growth in years in the second quarter — basic-video losses were down to 45,000 (compared to a loss of 152,000 in the prior year) and residential broadband additions were 172,000, nearly triple the 67,000 adds in the prior year. The consensus is that both companies will continue on that path in the third quarter.

Telsey Advisory Group media analyst Tom Eagan said the momentum of the past few quarters should continue for cable operators.

“We expect the numbers to be better than last year,” Eagan said of third-quarter results. He added that satellite TV providers DirecTV (now part of AT&T) and Dish Network are expected to continue their subscriber slide. And while telcos are expected to report video gains, growth is likely to be slower. That was evident last week when Verizon Communications said it added 42,000 FiOS TV customers in the third quarter, compared to 112,000 additions in the same period last year.

Charter lost about 33,000 basic-video customers in the second quarter, on par with the 29,000 it lost in the prior year.

In a note to clients, Morgan Stanley media analyst Ben Swinburne wrote that he expects third quarter pay TV subscriber losses to be slightly higher than last year — 90,000 compared to 55,000 in Q3 2014. But he expects cable to fare much better in the period — he predicts overall cable customer declines of about 110,000 compared to 345,000 last year.

All eyes will be on Time Warner Cable, which has dramatically changed its subscriber fortunes in the past year, Eagan said.

“They were one of the worst performers last year in terms of customer loss,” Eagan said. “Now [TWC chairman and CEO] Rob Marcus has said most recently they expect to add subscribers this year. That’s probably the biggest turnaround.”

The Charter deal is supposed to close by the end of the year and is currently winding through the regulatory approval process. While some analysts believe that the actual closing will take a little longer, possibly lasting into the first quarter of 2016, Eagan said investors are confident the transaction will be completed. He noted that the spread between Time Warner Cable’s trading price and the Charter offering price has narrowed from 7.2% to about 6.8% in the past few days, “which shows that the market feels better about the deal closing.”

Several companies have come out in favor of the deal and even its opponents said they would change their stance if certain conditions — mainly involving net neutrality and access to content — were adhered to. The Federal Communications Commission is shifting its focus away from distributors that could potentially restrict access to over-the-top video to another aspect of the industry, Eagan said.

“We think the sector most impacted by the FCC in 2016 is going to be content, not cable,” Eagan said, adding that the agency will be especially interested in retransmission-consent fees and network nonduplication rules that prevent distributors from importing distant broadcast signals into local markets.

NOT MUCH OTT IMPACT

The analyst added that fears of over-the-top video taking a chunk of cable subscribers for the most part have been unwarranted and that SVOD services like Netflix and Hulu, as well as OTT offerings like Sling TV, have proven to be a complement to the pay TV subscription.

“Every five to seven years there’s a new competitor — first it was satellite, then it was telco and now it’s over- the- top,” Eagan said. “I think, ironically enough, OTT will be less of a competitor than satellite and telco were to cable. You’re seeing those customers already being pay TV customers or they were never pay TV customers in the first place. OTT isn’t a replacement. ”

That could change if over-the-top offerings offer more channels at an affordable price, though.

“I would say cable has to get significantly worse or more expensive or OTT service has to get significantly better or cheaper for them to take material market share,” Eagan said. “I don’t think we’re quite there yet, especially with the average viewer watching 149 hours a month.”

A combination of fear, loathing and uncertainty converged on cable programming stocks in two extremely volatile days last week, sending investors stampeding toward the exits in a massive market correction that some analysts said could be a sign of things to come.

The Walt Disney Co. chairman and CEO Bob Iger inadvertently sparked a sell-off after his comments during an earnings conference call on ESPN refuting some reports that said the Worldwide Leader in Sports had shed 3.2 million subscribers in the past 12 months (he said losses were “modest”). More importantly, Disney took down guidance for its cable networks (of which ESPN is a huge part), stating that instead of high single-digit percentage operating-income growth through 2016, the cable segment would report mid-single-digit percentage growth.

Iger’s comments came just as the market was digesting a flurry of negative news: a sector-wide slump in ratings and ad sales; the growing popularity of over-the-top video; the resultant increase in cord-cutting; and, worst of all, no currency to measure that viewer shift.

It was enough to create a mini-panic in the media sector of the stock market. At one point, every major cable media stock was down at least 10% on Aug. 5. The media sector lost a combined $60 billion in market capitalization during the period, according to Bloomberg.

PANIC STRIKES

“Yesterday was probably one of the most challenging days media investors have ever had — literally,” RBC Capital Markets media analyst David Bank told CNBC Aug. 6.

He wasn’t really exaggerating. The one-day drop for the sector on Aug. 5 was one of the worst since 2008, when the advent of the Great Recession sent shares across all sectors down by double-digit percentages. When the market closed on Aug. 5, Discovery Communications led a parade of losers, falling 12.1%; followed by Disney, down 9.2%; Time Warner Inc., down 9%; Viacom, down 7.5%; AMC Networks, down 7.2%; and 21st Century Fox, down 7%.

The declines also bled into non-programming stocks. Comcast, which owns programmer NBCUniversal but derives more than 60% of its revenue from its cable-distribution operations, fell 5% on Aug. 5 to $59.81 per share. Other cable distributors followed suit, with Charter down 1.5%, Time Warner Cable down 1% and Cablevision Systems down 1.2%.

The bloodbath continued on Aug. 6, with Viacom plunging 14.2% ($7.31 each) to $44.10 per share after reporting a sharp 9% decline in domestic ad revenue in its fiscal third quarter. For the other stocks, the losses weren’t as heavy, but they continued, with Fox down 6.4%; AMC Networks down 4.2%; Disney down 1.8%; and Time Warner Inc. down 1%. Discovery gained some ground, up 3.5% on Aug. 6, but not enough to erase the previous day’s losses. The stocks began to claw back on Friday, with Viacom and Fox up about 3% each and others rising about 1%.

Investors have been skittish about over-the-top video, declining ratings and falling ad revenue before, but those fears seemed to reach a peak after hearing Iger talk of possible weak spots in what most had believed was ESPN’s otherwise impenetrable armor.

Bank told CNBC that Iger’s comments were among the biggest factors in the selloff. Coupled with Disney’s stature as one of the most broadly held media stocks in the world, they created a perfect storm.

“I think the average media investor knew there was some vulnerability to the cable bundle,” Bank told CNBC. “But if even ESPN is vulnerable, if the gold standard is vulnerable, then maybe everybody else is vulnerable.”

But BTIG media analyst Rich Greenfield, who has warned of the perils of OTT and SVOD to the distribution sector for years, said the worst has yet to come.

“I would just stay away,” Greenfield told CNBC of Disney on Aug. 5. “As you look at the future, the cable bundle is starting to become unhinged. Consumers are just giving up on multichannel television.”

Bank added that Iger’s comments were nothing new to longtime media investors. The possible effects of cord-cutters, over-the-top competitors and poor ratings have been hot topics for years. And today’s sell-off could be tomorrow’s buying opportunity. Already the stocks started to claw back slightly on Friday, with Viacom and Fox up about 3% each and others rising about 1%.

But the 48-hour stretch between Aug. 5 and Aug. 6 seemed to feed into a growing herd mentality among media investors, who stampeded away from what they perceive as a danger.

In a note to clients, MoffettNathanson principal and senior analyst Craig Moffett said the sell-off is another indication of a change in sentiment among media investors. Whether it’s based on fact doesn’t really matter.

“Almost every investor with whom we have spoken has described an almost palpable sense that sector sentiment has changed, some would say perhaps permanently,” Moffett wrote.

CONTENT’S REIGN OVER?

After years of hearing that “content is king,” some believe sentiment is beginning to shift gradually toward distributors, which have had their own pressures with over-the-top services and cord-cutting. But while the change in viewing habits, up to now, has mainly affected cable operators, satellite and telco-TV service providers, investors are beginning to realize that the disintegration of the pay TV bundle could have an equally devastating effect on programmers.

Distributors are not taking the threat lying down. Content companies, which have offset ad revenue and ratings declines by cutting distribution deals with OTT players, are now beginning to feel the pushback from pay TV distributors.

Charter Communications CEO Tom Rutledge recently told analysts that when content companies make the programming they sell to cable companies available in other spaces in pursuit of ancillary revenue, they risk diminishing the value of those offerings.

“No trend goes unchecked forever,” Rutledge said.

Dish Network chairman and CEO Charlie Ergen said although distribution is gaining some leverage, Netflix is the “most powerful content aggregator in the world today,” mainly because of its cost structure.

Netflix pays for programming at a fixed price, while Dish pays on a per-subscriber basis. That disparity, Ergen said recently, has caused Dish to change its approach to content deals.

“We have to now look at each content deal and decide whether, long-term, that content-to-content deal makes sense for us,” Ergen said on a recent call with analysts. “When somebody comes in and says, ‘I want a double-digit rate increase,’ and they’ve had double-digit viewership declines, we don’t think that math works for us.”

The shift in viewing habits — people are watching more programming on different devices and platforms inside and outside the home — has been going on for years, as has the cry for a new measurement metric to track just how many people are watching. Measurement companies are responding: Nielsen is expected to unveil its Total Audience Measurement product by the end of the year, and ComScore and Rentrak both have products tailored to tackle the change, but so far nothing solid has been released. If the programming sector sell-off continues, will that speed development of a new measurement currency?

“The primary beneficiaries of the sell-off of the entertainment stocks are the measurement stocks,” Telsey Advisory Group media analyst Tom Eagan said. “Essentially, declines among the programmers might finally convince them to come to an industry consensus on a crossplatform metric or currency.”

CHART: To see how major content stocks fared during the downturn, click here.

Most media stocks fell for a second day as earnings reports highlighted the risk that distribution revenue could be hurt if the pay TV bundle is coming undone.

The biggest losses came at Viacom, whose earnings report included a big drop in ad revenue. Viacom’s stock finished down 14 % at $44.10 a share.

AMC Networks fell 5% to $75.01 a share after its earnings report.

21st Century Fox, which lowered its earnings guidance for 2016 during Wednesday night’s earnings call (August 5), was down 6% to $29.06. And Crown Media, which owns Hallmark Channel, reported strong earnings on Monday, but its stock still fell Thursday by 8% to $4.64.

Other programmers whose share fell included Comcast, down 2% to $58.76; Disney, down 2% to $108.55; and Time Warner Inc., down slightly to $79.19.

See which media stocks bounced back at broadcastingcable.com.

AMC Networks reported higher second-quarter profits, reflecting the acquisition of BBC America.

Net income rose 41% to $83 million, or $1.14 a share, from $58.7 million, or 83 cents a share, a year ago. Net revenue rose 15.1% to $601 million.

Cash flow at AMC’s national networks, which include AMC, SundanceTV, IFC, BBC America and WE tv, rose 33% to $182.6 million. Net revenue was up 22.8% to $488.6 million, due to the inclusion of BBC America. AMC acquired a 49.9% stake in BBC America last year.

Ad revenue across the networks, including BBC America, increased 13.4% to $186 million. Growth was strong at WE tv, IFC and SundanceTV, the company said.

"AMC Networks had a strong second quarter, with double-digit growth in revenues, AOCF and operating income driven by our continued focus on investing in high-quality programming," CEO Josh Sapan said in a statement. "In addition to maintaining our core content strategy, we have become more of an owner of content; we have closely aligned ourselves with a premier producer of content through our BBC American joint venture.”

Read more at broadcastingcable.com.

Univision Communications reported a loss in the second quarter as revenue fell compared with last year, when its networks covered soccer’s World Cup.

The company lost $23.9 million in the quarter, compared with net income of $98 million a year ago.

Revenue fell to $696.3 million from $833 million a year ago. The company said the World Cup generated $115.5 million in incremental revenue a year ago. Excluding the World Cup, revenue decreased 1.7%.

“During the 2015 second quarter, we continued to execute on our strategy to deliver a Univision branded experience and target bilingual and millennial audiences with tailored ‘must-see’ content across platforms, which included signing a deal with Netflix to stream top Univision and UniMás content,” said CEO Randy Falco.

Read more at broadcastingcable.com.

Time Warner Inc. reported higher earnings as cost cuts at Turner Broadcasting boosted operating income. Profits were lower at HBO as it spent on marketing and technology to launch HBO Now.

Second-quarter net income rose 14% to $971 million, or $1.16 a share, from $850 million, or 95 cents a share, a year ago.

Revenue rose 8% to $7.3 billion.

The results were ahead of Wall Street expectations. The company also reaffirmed its guidance for full-year results.

At Time Warner’s Turner Broadcasting unit, adjusted operating income rose 20% to $1.1 billion as revenue rose and costs — including programming costs — declined. Turner’s revenue rose 3% to $2.8 billion.

Ad revenue was down 1% because of the strong dollar. Domestic ad revenue was up because of growth at its news networks and strong March Madness sales. Those gains offset the absence of NASCAR programming and having fewer NBA playoff games.

Adjusted operating income fell 8% at HBO, which had higher marketing and technology costs because of the launch of the HBO Now streaming service. Revenue at HBO was up 1% to $1.4 billion.

Read more at broadcastingcable.com.

Second-quarter revenue rose 7.6% and cash flow increased a strong 6.8% at Charter Communications, but basic-video customer losses rose slightly to 33,000 from 29,000 in the prior year.

Charter, which is moving forward in its $78.7 billion purchase of Time Warner Cable -- expected to close by the end of the year -- reported revenue of $2.4 billion and cash flow of $848 million for the period.

While basic-video losses were up slightly in the quarter -- the company said if bulk digital upgrades are excluded, basic-video losses fell to 28,000 from 44,000 in the prior year --  Charter managed to add 70,000 high-speed data customers -- up from 55,000 in the prior year. Phone additions of 33,000 were about even with the 35,000 added in Q2 2014.

Residential customer relationships grew by 34,000, with triple-play sell-installs improving year-over-year to 65% of total residential video sales. Residential PSUs increased by 70,000 versus a gain of 55,000 in the prior-year period.

"Our second quarter results demonstrate that our consistent focus on delivering superior products at highly-competitive prices, continues to drive our strong customer, revenue and cash flow growth," Charter CEO Tom Rutledge said in a statement.  "We look forward to applying that same focus and strategy across New Charter, following the close of our transactions with Time Warner Cable and Bright House Networks. Our new company will drive significant investment into broadband infrastructure, delivering faster broadband speeds and better video products to our customers, while driving customer and cash flow growth for our shareholders."