The pressure remains on for media conglomerates, with Sanford C. Bernstein analyst Todd Juenger on Thursday downgrading ratings on both The Walt Disney Co. and Time Warner, while Deutsche Bank lowered projections for already struggling Viacom. Almost all media companies were down in early-day trading on Thursday.

“We believe the U.S. television industry is entering a period of prolonged structural decline, caused by a migration of viewers from ad-supported platforms to non-ad-supported, or less-ad-supported platforms,” wrote Juenger in a report titled “Heightened Risk Calls for New Valuation Framework.” “We favor companies that have the least exposure to U.S. advertising, the most exposure to sports and advantaged positions internationally. But we fear the entire sector will struggle to work until the content owners take concerted action to reclaim on-demand viewing from the [streaming video on demand] services and use it to protect affiliate fees.”

Juenger said Disney and Time Warner in particular are unlikely to “outperform the market over the next 12 months,” according to The Hollywood Reporter. Overall, media stocks are now hovering at “near-recession levels,” said Juenger.

Earlier this month, Disney said in its quarterly earnings call that subscriptions to ESPN, which has been a cash cow for Disney, were down as cord-cutting continues to ravage the pay-TV industry.

“We believe a whole new framework is necessary,” Juenger wrote. “Historical multiples are irrelevant. We believe the market is now valuing U.S. ad-supported TV businesses as structurally impaired assets.”

Juenger continues to rate 21st Century Fox as “outperform,” writes THR, although even that stock also took a hit on Thursday.

Juenger has argued that syndicating shows to SVOD providers has hurt programmers because those deals hurt cable networks, reports Deadline. Many of the most popular cable networks, including USA, TNT and TBS, built their businesses atop off-network dramas and comedies. CBS, which was not mentioned Thursday, has led the field in selling shows to SVOD services for top-of-the-market prices.

Meanwhile, Deutsche Bank also downgraded Viacom, which this year has had to take a $785 million write-down and lay off several hundred employees. Deutsche Bank believes that it’s critical for Viacom to renew its programming contract with Dish Network, which is coming up for renewal next year.

“We think that even if Viacom is able to secure a Dish renewal at competitive rates, pressure coming from smaller bundles, continued weakness in traditional pay-TV subscribers, combined with the fact that stronger networks are also looking for healthy increases will likely limit Viacom’s ability to achieve the top end of its long term affiliate guidance,” wrote Deutsche Bank Ben Kraft in a research report as reported by Investor’s Business Daily.

Read more: THR, Deadline, Investor’s Business Daily

Brief Take: It’s adapt or die slowly as drastic change takes hold across the media industry.

Cube image courtesy of Deadline.

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