Media stocks dip as Disney reveals subscriber losses at ESPN

A part of the signage at the main gate of The Walt Disney Co. is pictured in Burbank, California, May 7, 2012. REUTERS/Fred Prouser

(Reuters) - U.S. media stocks fell on Friday after Walt Disney Co's disclosure of a drop in subscribers at ESPN spooked investors, underscoring concerns that viewers are increasingly opting for online streaming over pay TV. Disney's shares were down 3.6 percent at $114.44, weighing the most on the Dow Jones industrial average on a relatively quiet day for the U.S. stock markets after Thanksgiving holiday. Time Warner Inc's shares were down 1.2 percent, Twenty-First Century Fox Inc 1.4 percent and Viacom Inc 3.4 percent. The number of subscribers at sports network ESPN fell by 3 million to 92 million as of Oct. 3, according to Disney's regulatory filing. The decline sparked fresh worries even as Disney CEO Bob Iger sought to soothe investor concerns earlier this month, saying "there was no reason to panic" about his earlier comments acknowledging changes in TV viewing habits. Iger said in August that ESPN had experienced "modest" subscriber losses as consumers were shifting to digital platforms. The threat of "cord-cutting," or dropping of pay TV service, remains a key concern for investors. U.S. consumers are shifting to Internet television faster than expected and creating challenges to major media companies that have thrived with programming on pay TV. Still, live sports remain one of the few types of programming that still draw massive audiences at one time, making them valuable to advertisers. And for many customers, sports is the reason they keep their pay TV subscriptions. (Reporting by Abhirup Roy and Supantha Mukherjee in Bengaluru; Editing by Saumyadeb Chakrabarty)