Discovery Communications (DISCA) Stock Weighed Down by Time Warner's Dim Forecast

Discovery Communications (DISCA) stock is retreating in afternoon trading on Wednesday, as many media stocks decline after Time Warner lowered its 2016 earnings guidance.
By Rachel Graf ,

NEW YORK (TheStreet) -- Discovery Communications (DISCA) - Get Report stock is down by 3.83% to $29.89 in afternoon trading on Wednesday, as Time Warner's (TWX) lowered fiscal 2016 earnings forecast pressures many stocks within the media industry.

Earlier today, Time Warner lowered its fiscal 2016 adjusted earnings guidance to roughly $5.25 per share, down from its prior forecast for "close to $6," Reuters reports. Analysts were estimating for earnings of $5.60 per share.

Lower-than-expected subscriber numbers and weak ratings at domestic networks prompted the revision, Time Warner said on its earnings conference call, according to the Wall Street Journal. 

The comments are fueling concern that an increasing number of "cord-cutters" are leaving traditional cable TV companies in favor of streaming services. 

Shares of Walt Disney (DIS), Viacom (VIAB), CBS and Twenty-First Century Fox (FOXA) are lower this afternoon as well. 

Additionally, on Tuesday Discovery reported 2015 third quarter earnings of 47 cents per share on revenue of $1.56 billion. Analysts had forecast for earnings of 38 cents per share on revenue of  $1.58 billion.

Insight from TheStreet's Research Team:

Eric Jackson commented on Discovery in a recent post on RealMoney.com. Here is a snippet of what Jackson had to say about the stock:

The concerns with Time Warner and now Viacom are that perhaps some in the ad market -- CBS and Discovery -- are picking up business while others are not. Perhaps this isn't the case of the ad market firming up for everyone in the third and possibly fourth quarters. Maybe what we're starting to see are clearer winners and losers.

Discovery made a big point in its conference call yesterday about its ratings success among men and women (with Discovery and ID networks). CEO David Zaslav said: "We're open for business" with advertisers. The hint in his words was perhaps others are not.

- Eric Jackson, 'We've Got News for You: Big Media Taking a Hit From Time Warner' originally published 11/4/2015 on RealMoney.com.

Want more information like this from Eric Jackson BEFORE your stock moves? Learn more about RealMoney.com now.

Separately, TheStreet Ratings team rates DISCOVERY COMMUNICATIONS INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

We rate DISCOVERY COMMUNICATIONS INC (DISCA) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, attractive valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, a generally disappointing performance in the stock itself and feeble growth in the company's earnings per share.

You can view the full analysis from the report here: DISCA

Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.

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