During the past week, Sony cancelled the scheduled release of the movie The Interview, due in part to threats made against theaters planning to show the film. Over the past several weeks, Sony has been dealing with the aftermath of a cyberattack in conjunction with the planned release of this same film. In light of these events, and the potential risk for other media companies to be targeted by hackers over content, have industry analysts covering media companies become more pessimistic on their outlook for this industry? Have analysts made any changes to earnings estimates or ratings over the past few weeks?
Looking at revisions to EPS estimates and ratings, and targets over the past three weeks (since November 28) for companies in the Media industry in the S&P 500, the answer is no. In terms of EPS expectations, analysts did not make any major revisions to earnings estimates for the fourth quarter or the full year during this period for companies in this industry. The bottom-up EPS estimate for the Media industry (which is an aggregation of the earnings estimates for all companies in the Media industry in the index and can be used as a proxy for the earnings for the index) for Q4 did not change over this period ($6.40). The bottom-up estimate for FY 2015 for the media industry has decreased by 0.07% over this period (to $27.33 today from $27.35 on November 28).
In terms of ratings, analysts have become slightly more negative on this industry since November 28. The overall percentage of Buy ratings declined to 53% from 54% during this time frame, while the percentage of Hold ratings increased to 43% from 42% during this time frame. The percentage of Sell ratings remained unchanged at 3%.
It is interesting to note that the aggregate value of the media companies in the S&P 500 has only declined slightly over this period. Since November 28, the aggregate price of the S&P 500 Media industry has fallen by 0.5%, while the price of Sony (ADR) has fallen by 3.9%.