U.S. financial markets dipped on Thursday, as the Dow Jones Industrial Average fell 32.23, to 22,840.66, and the Nasdaq composite index declined 12.04, to 6,591.51.
TV industry companies helped drag down the overall market, as fears over cord-cutting viewed by AT&T impacted others.
Viacom sank to a five-year low with a 2.5% dip, to $24.57. Volume was exceptionally heavy, at 17.2 million shares; normal trading volume is 5.13 million shares. Viacom has a 1-year consensus target estimate of $37.41. That hasn’t been seen since early May.
A big part of Viacom’s problems on Thursday, in its view, is tied to Charter Communications and its Spectrum cable TV service. Viacom, parent to such networks as Nickelodeon, BET, Comedy Central and MTV, debuted TV ads this week urging viewers to call Spectrum’s customer support staff now to demand a new agreement.
Without the accord, Viacom channels could go dark on Optimum systems across the U.S. This would impact much of New York State, Los Angeles, and the state of Hawaii, among other locales.
Gabelli & Co. analyst Brett Harriss noted in a research note that, should Charter Spectrum be forced by law to drop the Viacom channels, Viacom could lose some $760 million (16%) of its annual affiliate revenue.
Viacom has 23 of its channels on Charter systems.
Such a scenario would likely be only temporary, however, with limited financial impact on Viacom.
The current deal expires Oct. 15.
For a full look at how media companies fared on Wall Street, please visit our Wall Street Report on the homepage of RBR.com.