Shares in Australia's largest diversified media business Seven West Media have lost almost a quarter of their value in response to its surprise earnings downgrade.
And the fall in Seven West's share price appears to have taken many other media stocks down with it, as investors come to grips with an exceedingly tough outlook for the advertising market.
Fat Prophets senior analyst Greg Fraser said Seven's downgrade was bad news for the media sector, particularly television-related stocks.
"If Channel Seven is not attracting the revenue to catch its audience then the chances that others are faring worse are quite likely," Mr Fraser said.
Seven West closed down 86 cents or 22.81 per cent at $2.91 on Thursday.
It was the first trading day since the company announced on Tuesday that its earnings before interest and tax (EBIT) was expected at around $50 million less than market expectations.
Seven West said it expected EBIT at between at between $460 million and $470 million for its full year to June 25.
Seven West owns the Seven TV network and publishes Pacific Magazines, Yahoo!7, The West Australian newspaper, regional mastheads and radio stations.
Seven's downgrade comes after Network Ten reported a 70 per cent fall in profit in its first half.
Mr Fraser said Channel Nine's recent resurgence, with high rating programs such as The Voice, could also be a factor in Seven's revised outlook.
"Even though Seven has had a higher audience share rating, the advertising expenditure that normally coincides with that hasn't happened," Mr Fraser said.
He said the outlook for advertising revenue was still quite weak.
"It's quite worrying for the sector generally," he said.
Mr Fraser also said that radio and newspapers continued to perform worse than television stations.
CMC Markets chief market strategist Michael McCarthy said media investors were spooked by Seven's downgrade.
"Fairfax appears to be caught in the downdraft," Mr McCarthy said.
Fairfax shares were down two cents, or 2.78 per cent, lower at 70 cents, Prime Television shares were 2.7 per cent lower at 72 cents and Southern Cross Media shares had given up 5.1 per cent to $1.30.
Investors appeared to have priced in Ten's earlier losses. Ten Network shares were flat at 81 cents.
APN News and Media was flat at $81.75 while News Corp shares edged two cents higher to $18.90. News Corp non voting shares were up three cents at $18.63.
In February, Seven West reported EBIT of $309.7 million for the first half of its 2011/12 financial year.