Nine Entertainment's earnings downgrade has dented the market value of several major media companies, despite a reassurance from rival Seven about its profit forecast.
Investors sold out of Nine, Seven West Media and Nine's streaming service partner Fairfax Media following Nine's warning late last week that advertising revenues are shrinking.
Nine has downgraded its earnings guidance for the financial year to between $285 million and $290 million, from its previous $311 million forecast.
Its shares dropped 33 cents, or 16 per cent, to $1.655, their sharpest fall since returning to the share market in December 2013, and their lowest price in almost five months.
Seven Network owner Seven West Media told the market on Tuesday it still expects to achieve an underlying net profit of between $205 million and $215 million in the year to the end of June, as it forecast at the end of April.
But its shares did not recover from heavy selling in early trade, ending the day 13.5 cents lower, or 11.39 per cent, at $1.05.
Fairfax, Nine's partner in streaming service Stan, dropped two cents, or 2.11 per cent, to 93 cents.
Rival free-to-air broadcaster Ten was up, but only by half a cent to 24.5 cents.
IG market strategist Evan Lucas said Nine's profit warning revealed the changing structure of the media landscape.
"This is a sign of the leaching of the ad market away from free-to-air TV into other forms of media," he said.
"It is such a major downgrade for Nine just a few months after their previous guidance, and the ad market revenue is such a soft, soft number."
Mr Lucas said there are no signs of improvement for traditional TV broadcasters, with the media landscape becoming increasingly fragmented, and even major advertisers like car makers spending on alternative forms of advertising.
"It's clearly a structural change in the ad market rather than a cyclical one," he said.
Nine needs to invest even more in its programming to respond to changing ad markets, but that may be difficult given the company remains committed to increasing the proportion of its profit it shares with investors via dividends, Mr Lucas said.
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