Entertainment companies have been eager to play the new-media card, and this week they rolled out splashy ways to bulk up their Internet streaming ventures.
HBO hired Jon Stewart, who recently wrapped up his Comedy Central show, to bring his political commentary to its $14.99-a-month HBO Now subscription service. CBS is exploring the new frontier by developing a "Star Trek" series that it hopes will bolster its $5.99-a-month CBS All Access online venture.
Wall Street took notice -- but not in the way the media companies had hoped.
On Wednesday, investors again began dumping media stocks after HBO parent Time Warner Inc. said next year's earnings would be lower than expected. That elicited a new wave of anxiety that media companies won't be as profitable should more consumers scale back their pricey pay-TV subscriptions -- or cancel them entirely.
There's concern among media analysts that the transition to digital might be messier than first recognized.
"This is going to be a more volatile group for a while," said Doug Creutz, an analyst with Cowen & Co. "We've seen TV audiences dramatically decline. We're seeing ad dollars flow out of national TV and into digital. And they've got the specter of people cord-cutting."
There's fear that traditional media giants have fallen into a vicious cycle. As they turn their focus to subscription services such as HBO Now, are they giving consumers even more reason to ditch their cable and satellite TV packages?
Wall Street's skittishness has forced media firms to take a hard look at their strategies to make sure they are not sacrificing profits in a rush to embrace digital platforms. Some analysts have called for companies to reassess whether they have made too much of their programming available to Netflix, Hulu and other services -- further encouraging a flight of TV viewers. Others suggested rate increases for online subscription services to boost profit.
"This isn't a near-term problem, but a long-term battle that is going to be fought for several years because no one knows what the future of the industry is going to look like," Creutz said.
Media stocks faltered during Time Warner's call with analysts to discuss its third-quarter earnings. Chief Executive Jeff Bewkes said his company -- which owns HBO, CNN, TBS, TNT and Warner Bros. -- expects adjusted earnings of about $5.25 a share next year, well below the $5.60 a share forecast by analysts.
One reason for the lower earnings, Bewkes said, was because the company is investing more in new programming for its streaming service, HBO Now, and other digital initiatives. He cited HBO's recent deals with Jon Stewart and "Sesame Street" as well as Turner Broadcasting System's plans to launch a new digital studio, Super Deluxe.
Investors got spooked, at one point sending Time Warner shares down about 10%.
Media stocks stabilized as the trading day wore on, but Time Warner closed down $5.10, or 6.6%, at $72.20. Rupert Murdoch's 21st Century Fox finished down $1.63, or 5.2%, at $29.65. Viacom, owner of Nickelodeon and MTV, fell $3.37, or 6.6%, to $47.92.
The sell-off continued the panic that began after Walt Disney Co.'s acknowledgment in August that ESPN subscriptions have dropped in the last few years as consumers opt for smaller cable bundles. Investors recognize that cable affiliate fees remain the biggest source of profit for most major entertainment companies, including Disney, Time Warner, Fox and Viacom.
Some said companies should not be distracted by Wall Street's desire for short-term profits.
"You can't jeopardize your entire business for the next five years just to make Wall Street happy in the second quarter of 2015," Wunderlich Securities media analyst Matthew Harrigan said.
Fox Chief Executive James Murdoch, in a conference call to discuss his company's fiscal first-quarter earnings, put it like this: "We have to be willing to take some risk but also be innovative and disruptive."
But Murdoch might have unintentionally contributed to investors' concerns when he touted skyrocketing growth of online video service Hulu. The popular service -- which is owned by Fox, Walt Disney and NBCUniversal -- has been aggressively going after new subscribers and new programming.
During the first nine months of the year, total viewing on Hulu jumped 85% compared with a year earlier, he said. Customer sign-ups have increased 60%.
Analysts remain unsure what strategies companies should follow as they shift more of their business toward digital subscriptions. Some recommended that media companies stop selling so much of their content to Netflix -- or sell it months or years after a show first appears on TV.
"If networks and studios start to withhold from Netflix and Hulu, it will certainly make the offerings on those platforms less attractive," said Forrester Research analyst Jim Nail. "The flip side of that is, these media companies need to figure out how to monetize that content on their own on-demand platforms. Right now, they're doing really lousy jobs."
Bewkes said his team was evaluating whether to keep rights for its shows longer for on-demand viewing instead of licensing them to streaming services such as Netflix or Amazon.com.
"We're moving quickly and decisively to take advantage of changes in technology and consumer behavior, and I'm confident the investment we're making in content, capabilities and in the consumer experience will further strengthen our competitive position," Bewkes said.
In the last three years, TV programmers have viewed Netflix, Hulu and Amazon -- known in the industry as subscription video-on-demand -- as newfound money.
That's because streaming services have agreed to pay huge premiums for the rights to the media companies' TV programming, and those $100-million-plus checks have helped make up for falling television advertising sales.
"They're all selling to SVOD because they need the money," said BTIG Research analyst Richard Greenfield. "But what is that doing to Turner's ratings? They all want to generate the incremental revenue from SVOD. The problem is, it's a circular loop [and] it's causing people to not watch live TV and leave the bundle."
He praised CBS for putting its upcoming "Star Trek" series on CBS All Access, calling it "an important first step in the right direction." The series could spur the long-running franchise's rabid fans to subscribe -- boosting revenue.
There are some on Wall Street who still feel this year's sell-off in big media companies might be an overreaction by jumpy investors.
"The whole cord-cutting thing is still overblown," said Nail, noting that an overwhelming majority of consumers -- more than 90 million households in the U.S. -- are still paying for a traditional pay-TV bundle.
"But," Nail said," it's probably a very healthy thing for the media companies to get slapped on the head by Wall Street to say, 'Hey, wake up. You're leaving money on the table. You're losing revenue that you should be capturing.'"
Staff writer Yvonne Villarreal contributed to this report.