These are stressful times for media companies. 

As a group, media stocks are underperforming the broad market. The S&P Media index, which includes Walt Disney Co. (DIS) , Comcast Corp. (CMCSA) and Twenty-First Century Fox Inc. (FOXA) , has gained 7.6% in 2017, compared with the S&P 500 index, which has advanced 10.4%. The gap isn't enormous, but the trend is concerning. Evan a stalwart such as CBS Corp. (CBS) has dropped 8.5% this year.

Disney CEO Bob Iger's warning last week that his company's financial results for the current quarter were trailing expectations sent a shiver through the entire sector. When Disney burps, media companies feel sick.

To re-energize investor interest, companies long on television networks and a reliance on pay-TV distribution will gather at Goldman Sachs' annual Communacopia Conference this week in New York. Though many of the sector's biggest players including Netflix Inc. (NFLX) finance chief David Wells will be in attendance, Disney will be conspicuously absent from the gathering held at the Conrad Hotel in downtown Manhattan.

Chief among concerns will be forecasts for pay-TV subscriptions. Among the seven-largest cable and satellite TV providers, total subscribers fell by 650,000 in the second quarter, or a 0.7% decline from the same period a year earlier, according to data compiled by Bernstein Research. That the quarterly decline continues to edge up toward 1% is an ominous sign.

The most salient example of this worsening trend is Disney's ESPN, which has seen its subscriber rolls drop to around 87 million from a peak of more than 100 million in 2011, according to Nielsen NV. 

Comcast CEO Brian Roberts will offer some explanation on how his company expects to adapt to last week's announcement that it could lose as many as 150,000 pay-TV and internet subscribers as a result of the recent spate of hurricanes as well as competition from new digital pay-TV alternatives such as YouTube TV from Alphabet Inc. (GOOGL) and Sling TV from Dish Network Corp. (DISH) .

Making matters worse, advertising sales also are weakening, a point which could move media stocks this week depending on the kind of "color" that company executives will be asked to give about the current market. Media stocks were hard hit back in August when both Discovery Communications Inc. (DISCA) and Scripps Networks Interactive Inc. (SNI) issued ad sale forecasts that fell short of analyst expectations, and Time Warner Inc. (TWX) followed with its own underwhelming projection that advertising revenue would increase in the "negative low single-digits" as a percentage of growth, another miss. 

Disney CEO Bob Iger.
Disney CEO Bob Iger.

Neither Discovery nor Scripps, which recently announced plans to merge, will be at the Goldman Sachs event.

Headlining the event is AT&T Inc. (T) chairman and CEO Randall Stephenson, the upbeat, friendly face of a company eager to convince the Trump administration to approve its $86.5 billion acquisition of Time Warner. Some companies such as Lions Gate Entertainment Corp. (LGF.A) , owner of Starz, have complained that under the merger AT&T's pay-TV platforms could favor Time Warner content over that of its rivals. Stephenson can be expected to argue that AT&T will be "agnostic," meaning it won't take sides in the content wars. 

A large crowd is certain to pack the hall to hear Netflix's Wells. Hearing from Netflix is kind of like listening to Robert Kraft, owner of the New England Patriots. Rarely will anything surprising be said, but it's always fun to hear what the league leader is doing to protect its perch.

In the case of Netflix, that's roughly $6 billion in original programming, a sign that consumers will continue to have more reason to subscribe to a service that costs $8 or more per month and doesn't require commercial interruptions, with pay-TV at roughly $82 per month and lots of commercials. Recent news that both Apple Inc. (AAPL) and Facebook Inc. (FB) are preparing to spend more than $1 billion apiece over the next 12 months producing their own original content further illustrates the shifting dynamics of the industry.

One very big X factor for all those in attendance is the future of sports programming. This year's Goldman conference features executives from both Major League Baseball and the National Football League. While live sports remains programming that can't be time-shifted, offsetting the costs of long-term multibillion-dollar contracts is becoming more of a question mark for major broadcasters including CBS, whose CEO, Leslie Moonves, will speak on Thursday.

But the overarching focus remains the future of pay-TV.

Disney's recent actions speak louder than any words from Iger. By announcing plans last month to launch two direct-to-consumer streaming services, Disney only confirmed the widening shift to online distribution and away from the pay-TV model. That's not to say that pay-TV is dissolving, simply that it's not growing -- and, more importantly, the declines have yet to level off.

Investors will be eager to hear an argument for having TV network owners in their portfolios.

Comcast, Alphabet, Apple and Facebook are holdings in Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio. Want to be alerted before Cramer and the AAP team buy or sell CMCSA, GOOGL, AAPL or FB? Learn more now.

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