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Comcast Slides, Investors Dump Media Stocks

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Jul. 3 2018, Published 7:30 a.m. ET

Comcast extended its losses

Comcast (CMCSA) retreated more than 1.0% and closed at $32.78 on June 26. Comcast extended its June 25 losses when the stock pulled back more than 2.0% amid widespread selling in US stocks.

While US stocks were generally up on June 26, the media sector bucked the trend. The S&P 500 media sector fell 0.41%. Walt Disney (DIS) fell 0.19%, Dish Network (DISH) pulled back 0.18%, and Twenty-First Century Fox (FOXA) (FOX) fell 0.96%.

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Media declined and energy gained

The selling in Comcast and other media stocks might have been a result of investors drifting to energy stocks. The S&P 500 energy sector rose 1.4% on June 26. Energy stocks, including ExxonMobil (XOM) and Chevron (CVX), rose following a comment by a senior US official that the US government expects countries to stop buying oil from Iran by early November. Cutting Iran’s oil supplies from the global market could help lift oil prices and yield more profits for oil producers.

Bets could lead Comcast deeper into debt

Prospects of increased competition and high-stakes bets by leading media companies Comcast and Walt Disney (DIS) might have contributed to investors fleeing media stocks on June 26. AT&T (T) is expected to stir more competition in the media market following its acquisition of WarnerMedia. Comcast and Disney are vying to acquire strategic assets to extend their global reach and counter digital disruptions, but the bets could lead them deeper into debt. Comcast agreed to acquire European satellite broadcaster Sky for $31 billion and challenged Twenty-First Century Fox’s $25 billion bid for the broadcaster.

Comcast’s revenues rose 10.7% year-over-year to $22.8 billion in the first quarter.

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