Legacy Media Stocks Pulled Down By Snap's Ad Warning

Signaling a wider macro-view of a possible slowdown in advertising, traditional TV-based media companies' stock prices declined sharply after social media platform Snap said on Tuesday it is seeing a steepening deceleration of its digital ad revenues.

Warner Bros. Discovery closed down on the day 7.8% to $16.86 and AMC Networks declined 4.2% to $38.51, while Fox Corp was 5.1% lower to $30.00, Paramount Global dropped 3.9% to $31.80, and Walt Disney fell 4% to $101.55.

Michael Nathanson, senior research analyst/co-founder of MoffettNathanson Research, says there are some concerns that the second quarter advertising may end a bit soft -- even with the understanding that traditional TV is mostly dependent on a different set of advertisers than pure-play digital media companies.

“TV is more about brand [advertising],” he said, speaking on CNBC. Still, he added, “there is a realistic concern about what it means for TV and... other media as well. We’ll find out at the end of June if this hits other companies as well.”



Traditional TV-network-based media companies have already been bracing for a potentially weaker upfront TV advertising market -- set to commence within a week or so, where around $20 billion in ad messaging gets placed before the start of the TV season that begins in late September.

Near-term first- and second-quarter TV buying -- the “scatter” ad market -- has been weaker than usual, according to many estimates.

Scatter-based deals have been typical marketing indicators of what follows in the upfront ad market.

Local TV station companies were also impacted by Snap's news on Tuesday. The largest U.S. TV station group, Nexstar Media Group, was down 8.5% to $160.43. Sinclair Broadcast Group sank 12.6% to $21.86, while E.W. Scripps suffered a 5.7% decline to $14.90.

Other digital TV-video advertising selling and buying companies' media stock prices also fell.

Roku was 13.7% lower to $79.16. Demand-side advertising platform (DSP) The Trade Desk, whose recent focus has been the growth of the connected TV (CTV) business, was set back 18.5% to $42.78 at the close.

Many companies -- already impacted by a potential recessionary period to come --- sank to new 52-week lows. Media-stock survivors on the day were the more diversified media and communications companies.

Charter Communications was up 1.1% to $479.02, while Comcast Corp. inched up 0.4% to $43.07.

More traditional mobile and broadband companies did even better -- Verizon Communications was up 2.4% to $50.65, while AT&T was up 2.2% to $21.15.

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