Time Warner falls as Disney's cable warning spooks sector
By Sagarika Jaisinghani and Arathy S Nair
(Reuters) - Time Warner Inc's shares fell as much as 9 percent after Walt Disney Co alarmed investors with a dour outlook for its cable business, suggesting that more people were switching to video-streaming from paid TV than previously expected.
Disney's comments overshadowed Time Warner's strong quarterly results, which were boosted by a deal with video-streaming service Hulu and the release of "Batman: Arkham Knight" and "Mortal Kombat X" videogames.
"On any other day, this report would likely be warmly received and a positive driver for the stock," Sanford C. Bernstein analyst Todd Juenger wrote in a note.
"But today is not just any day. Today is the day after Disney spooked the sector with their comments that cord-cutting is worse than they thought."
Disney cut its profit forecast for its cable networks unit on Tuesday, citing a decline in subscribers. The company's shares fell about 10 percent on Wednesday.
Time Warner and Disney are remodeling their businesses to grab a larger share of the video-streaming market as consumers increasingly take to watching television shows online, a trend dubbed as "cord cutting".
In April, Time Warner's Turner division, owner of channels such as CNN and TNT, granted exclusive subscription video-on-demand rights for its programs from Cartoon Network and Adult Swim to Hulu.
Time Warner also launched its own standalone streaming service, HBO Now, in the same month. Continued...