Yesterday, the U.S. media sector saw sell-offson the double whammy of Hurricane Irma (and Harvey to some extent) and downbeat guidance issued by management of Walt Disney Company (DIS - Free Report) and Comcast Corporation (CMCSA - Free Report) . Disney lost about 4.4% on Sep 7, while it added about 0.04% after hours, and Comcast retreated about 6.2% on Sep 7.
Behind the Downcast Mood
Florida is bracing up to face Hurricane Irma on Friday and has issued a state of emergency. Since the storm is deemed to be the most powerful to lash out on the U.S. mainland since 1992, Miami is readying for its largest evacuation in almost a decade (read: Hurricane Irma: ETF Winners & Losers).
Though Disney remains open, many of its events have been called off. Disney's Blizzard Beach will be shut on Friday and Saturday, “the park's Fort Wilderness Resort and Campground will be closed beginning Saturday 2 P.M.”, as per the source. Disney was shut down in 2016 for Hurricane Matthew.
Added to this, Disney CEO Bog Iger cautioned about profits this year which are likely to be similar to last year. The company reported $5.72 in earnings per share for fiscal 2016, which is lower than the Zacks Consensus Estimate ($5.87) for the current year.
On the other hand, Universal Studios of Comcast Corporation also cancelled Saturday's "Rock the Universe" concert due to Irma. Comcast’s management warned about a significant drop in subscribers during the third quarter. As many as 150,000 video subscribers could be lost in the quarter.
Comcast management attributed the loss in subscribers to stiff competition in the telecom sector, as the industry grapples with pressures from streaming. However, management also held two big hurricanes in the quarter responsible for subscriber loss. “Comcast management said this quarter has been one of the most competitive in recent memory,” going by an article published on MarketWatch.
Impact on Industry
Such downbeat indications from two industry biggies acted as a cornerstone for the entire space, though some of the players have positions in the streaming market. Altice USA Inc. (ATUS - Free Report) , which is a broadband communications and video services provider, lost about 3.4%. Viacom Inc. (VIAB - Free Report) , a global entertainment content company, was off about 3.6%. Twenty-First Century Fox Inc. (FOXA - Free Report) shed about 2.4%. Mass media company CBS Corporation (CBS - Free Report) fell about 2.1% on Sep 7. DISH Network Corporation (DISH - Free Report) was off 3.7% (see all Consumer Discretionary ETFs here).
ETFs that May Get Hurt Ahead
PowerShares Dynamic Media Portfolio (PBS - Free Report)
The fund puts 4.9% weight in Disney, 4.8% in CBS Corp. and 4.9% in DISH Network Corp.
Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report)
Comcast and Walt Disney take about 4.6% and 5.7% of the 86-stock fund. The product lost about 0.9% on Sep 7 (read: 6 Reasons to Dump Amazon & Related ETF Strategies).
Vanguard Consumer Discretionary ETF (VCR - Free Report)
The 377-stock fund invests about 5.9% in Amazon and 5.3% in Walt Disney. The fund pared about 0.7% gains on Sep 7.
Fidelity MSCI Consumer Discretionary Index ETF (FDIS - Free Report)
Comcast accounts for about 6.1% of the fund while Disney takes about 4.95% of it. The fund was up about 0.7% on Sep 7.
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