Citing "concerns about the pay TV ecosystem," Goldman Sachs has nixed Time Warner (TWX)  from its "Conviction List," a list of stocks the investment bank firm expects to outperform the wider market.

While Goldman is maintaining a Buy rating on Time Warner, which owns cable networks TBS, TNT and HBO as well as CNN, the downgrade is yet another sign that investor confidence in traditional pay-TV is eroding. Concerns are rising that online-only content providers like Netflix (NFLX) - Get Report , Amazon (AMZN) - Get Report Prime and Hulu will increasingly cut into the pay-TV business model built on advertising revenue and fees from cable- and satellite-TV providers.

"Since we added TWX onto the [Conviction List] on Nov. 20, 2014 the stock is down 9% versus the S&P 500 down 4% and Media down 13%. "Our revised 2016 [estimate] EPS of $5.40 is 8% below TWX's guidance and 5% below consensus." 

For similiar reasons, Viacom (VIAB) - Get Report and Scripps Networks (SNI)  were downgraded by Goldman Sachs, which cited the two stocks as being "squarely in the middle of cord cutting." That is, the increasing pace of households to drop their pay-TV service or not subscribe at all. Nearly 2 million households have either cut their cable-TV cord or elected not to get one, according to MoffettNathanson, the media research firm in an August report.

Viacom's rating was changed to Neutral while Scripps Networks was moved to sell because the company "has among the highest exposure to TV ads at 67% revenue." Indeed, television advertising continues to slip as marketers move a larger portion of their spending to a variety of online platforms.

Time Warner's comparatively low exposure to advertising works in its favor, Goldman said. The report praises Time Warner's low ad exposure, which is perhaps the most troublesome variable in the media equation right now and certainly one that Wall Street analysts are paying attention to. It's good news that Time Warner "generated 17% of revenue from advertising, among the lowest in the peer group."

In the long term, however, that might still be too high, as ad bucks flow away from traditional commercial breaks and toward online distributors that the millennial generation is finding more and more popular. According to a study by Nielsen, pay-TV has lost more than 2.2 million customers since 2013, mostly among millenials.

Despite the secular shift in the media business, analysts expect the transition to be a prolonged one. Quality content, such as AMC's AMCX Fear the Walking Dead, which broke cable-TV viewing records for its premier in August, and Fox's (FOX) - Get Report runaway hit Empire, as well as many live sporting events, are keeping the doomsayers at bay.

The is question is for how long.

"The underperfomance of media stocks and the near-trough P/E suggest that investors believe the negative inflection in 2Q cord cutting is just the beginning of a secular downtrend," Goldman concludes. "We understand the concern and do not entirely disagree."