The air at the “Magic Kingdom” is decidedly icy. Events leading up to Walt Disney Co’s (NYSE:DIS) fiscal second quarter subdued analyst forecasts. Nevertheless, as InvestorPlace feature writer James Brumley points out, “the company failed to trounce those tepid expectations.” While the crown jewel of media stocks is having an awful go of things, competitors can’t afford to relax.
That’s because ESPN was once again the conspicuous laggard for Disney. Although it’s still the top dog among sports channels, other entertainment alternatives have popped up. Additionally, it’s a double-edged sword. Viewership is shifting to online media outlets, while broadcasting rights for premium sports leagues only gets more expensive. Something had to give; hence, the mass pink slip distribution at ESPN.
The message couldn’t be more ominous towards media stocks.
Disney at least has the buffer of a world-class movie studio and a theme park and resort empire. But even with those beautiful assets, DIS stock is in ugly technical territory, having gapped down near no-man’s land.
And for media stocks without those safety nets? I’m not sure how long I’d want to stick around. The entertainment landscape overall has endured a paradigm shift. Popular “homemade” channels via Alphabet Inc’s (NASDAQ:GOOGL, NASDAQ:GOOG) YouTube are attracting millions of views and are available worldwide. Unless television programming is extremely compelling, even a modicum of attraction is no longer guaranteed.
Here are three media stocks that are at risk for joining Disney in the doghouse.