Media Stocks Outperform Miserable Day on Wall Street

Illustration by: Lars Leetaru

It's not unusual, though, for successful stocks to be hit hardest when markets crumble.

With notable exceptions such as Netflix, down 8 percent, media and entertainment stocks actually fared better than the overall markets on Tuesday, when the Dow Jones Industrial Average shed a hefty 470 points.

Among those in the sector that outperformed the Dow's 2.94 percent slide were Viacom (down less than 1 percent); Time Warner and Comcast (each down 2.3 percent); Walt Disney (down 2.4 percent); and 21st Century Fox (down 2.9 percent). Of the major conglomerates, only CBS and Sony fell harder than the Dow, at minus 3.2 percent and minus 3.5 percent, respectively.

Stock markets worldwide have been suffering for several weeks due to weak economies in Asia and elsewhere, a devaluing of China's currency and the realization that interest rates can't stay at rock bottom forever. Many experts also say that after years of climbing, markets were due for a correction.

Media and entertainment stocks in particular have been spiraling downward ever since Disney, Viacom and others warned of slower growth at their TV networks businesses as consumers gravitate to Internet streaming and some go so far as to "cut the cord" — cancel their cable TV subscriptions.

Netflix and other streamers ought to be the beneficiary of such trends, but its stock was such a high-flyer that it has seemingly suffered beyond what might be intuitive. It's not unusual, though, for the most successful stocks to be hit hardest when markets crumble as they have in the past few weeks, since they also have gained the most during better times.

While Netflix shares lost 8 percent to $105.79 on Tuesday, they remain a whopping 1,100 percent higher than where they traded three years ago. Apple might also be in the category of high-flying stocks that falls hard during a correction. The stock was down 4.5 percent on Tuesday, though its five-year gain is more than 300 percent.

On the flip side, other media-entertainment stocks outperforming the broader markets on Tuesday included: DreamWorks Animation, Lionsgate Entertainment and two of the top three movie exhibitors — Carmike Cinemas and Regal Entertainment. Also, several new-media stocks outperformed, such as Facebook, Twitter and Yahoo.