Wells says media stocks selloff on sports streaming JV ‘directionally correct’

After Tuesday night’s announcements of the Disney (DIS)/Warner Bro’s Discovery (WBD)/Fox Corp. (FOXA) sports streaming JV, the market has reacted, Wells Fargo says, with Media stocks overweight non-sports earnings from linear seeing the biggest weakness, such as Paramount (PARA) and Fox. Broadcasters are seeing larger selloffs due to the philosophical threat to retrans growth if consumers can access all sports without stations, and levered Broadcast is now very risky, the firm adds. Disney and Comcast (CMCSA) are least impacted. Wells believes cord cutting will get worse. But, while bundled subscriber declines will accelerate, there are also tens of millions of cord cutters/”nevers” that may engage, the firm argues. Thus, the net to Disney, Warner Bros., Fox, Paramount, Comcast will be more nuanced and currently tough to estimate, Wells adds. Overall, while the market has taken its view of sports moving into streaming, and while there are nuances, the firm thinks the selloffs are “directionally correct.”