Analysts at Wells Fargo said on Thursday they had no choice but to downgrade media and entertainment company Time Warner Inc. to market perform from outperform. The rating change comes a day after Time Warner management provided Wall Street with a disappointing 2016 outlook that will see profits and subscriber numbers drop below expectations. "We believe [Time Warner] is making the right long-term decisions, but it is going to take some time," analyst Marci Ryvicker wrote in a note. "In fact, we applaud management for taking steps to 'right the ship'-effectively taking short-term pain for long-term gain. Our sense from following [Time Warner] is that they do not want to be a company that repeatedly lowers guidance. So, our gut tells us that this is is--the worst is over." Short-term pain was felt by some of Time Warner's media counterparts as well, as fears surrounding cord-cutting and traditional cable TV were rekindled: 21st Century Fox Inc. , Viacom Inc. , Discovery Communications Inc. , AMC Networks Inc. and Walt Disney Co. suffered selloffs on Wednesday. During Time Warner's earnings call, Chief Executive Jeffrey Bewkes said shifts in consumer viewing behavior have led the company to begin providing more on-demand content, rather than license it to distributors such as Netflix Inc. and Hulu, which has been a positive source of revenue. Shares of Time Warner are down 15% in the year to date, underperforming the S&P 500 index, which is up 2%.
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