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Cyber stox log off winners' list, pulling b'cast down
SportsLine USA, partly owned by CBS, triggered the setback by warning that its third-quarter revenues would fall as a result of weaker-than-expected ad sales.
Stock of the Internet sports programmer, a core part of CBS' strategy to move into the Internet, plunged 53.9% during the day to close at $7.69 a share. A CBS spokesman expressed continued confidence in the company.
The stock spiral created a ripple effect that dragged down other Internet high flyers such as Yahoo! (down 8.4% to $114.38), American Online (down 5.8% to $92.00) and Amazon.com (down 13.7% to $93.44) in its wake.
Amazon.com got hit not only as a cyber sector stock but also as a company about to confront strengthened competition from the online joint venture announced by Bertelsmann Inc. and Barnes & Noble.
At the same time, the downward spiral among radio broadcasters continued, led by Chancellor Media Corp., which gave up 8.2% to end at $23.94, but not before challenging a ratings downgrade issued earlier in the day by NationsBanc Montgomery Securities analyst Gordon Hodge.
The analyst cut his rating on the company from buy to hold, sending the stock down $7 at one point, eliciting a rare response from Chancellor's chief financial officer, whose contention was that the downgrade reflected incorrect information.
"We put up second-quarter numbers that were record-setting," Chancellor chief financial officer Matt Devine said in a statement to the media. "The top line on a pro-forma basis was up 19%, and we are seeing the same type of dynamic translate into the third quarter of this year and the fourth quarter."
Chancellor's reaction was noteworthy in that such companies as Young Broadcasting, Sullivan Broadcasting and Granite Broadcasting remained silent on receiving similar downgrades in recent days.
Competing radio consolidator Clear Channel Communications fell even more than Chancellor, giving up 9.6% to close at $37. Both stocks are off more than 40% of annual highs reached in July.
Television broadcasters were spared, by comparison, as CBS Corp. fell only 2.2% to $22.31, Hearst Argyle TV lost 1% to $28.25 and Granite ended the day unchanged at $26.25.
But their relative stability mostly reflected their already being discounted to a degree greater than the Internet group.
No category's performance could be considered comforting, however, considering that the Dow Jones Industrial Average gave up only 1.3 points to close at 7741.69 while the media, entertainment and now Internet sectors churned dramatically downward.
Many such stocks are so low that they would seem ripe for takeovers. But as noted by a committed buyer, speaking not for attribution, the logical response for would-be sellers is simply to remove themselves from the market, much as Young Broadcasting did a couple of weeks ago after holding an auction for its TV group.
