In a series of research notes, Anthony DiClemente, a Lehman Brothers analyst, devalued the entertainment industry Monday and carved forecasts for Walt Disney Co, Time Warner and other top entertainment companies, presenting as arguments digital downloads of movies and TV shows that pose a colossal threat to profits from DVD sales that the companies rely on.

In addition to Disney and Time Warner, Lehman Brothers Inc., a subsidiary of the Lehman Brothers Holdings Inc. global financial services firm, minimized its ratings on News Corp. and CBS Corp. on concerns about "structural changes that appear destined to impact the core revenue and profits of (the) entertainment business."

Lehman kept its rating on Viacom Inc, but stil cut its price target on the stock. Also their all-around view of the industry was set from "negative" to "neutral."

The stocks of all five companies — The Walt Disney Co., News Corp., CBS Corp., Time Warner Inc. and Viacom Inc. — were down to various degrees in trading on the New York Stock Exchange. CBS suffered the sharpest fall, dropping 4.7 percent, or 87 cents, to $17.73.

"To be clear, our fear is that the damage that digital distribution inflicted on the music industry will replicate itself in the movie industry, and our fears are too great to justify keeping neutral or positive ratings on the creators and distributors of movie and TV content," analyst DiClemente noted in a research memorandum.

According to DiClemente, the average profit the companies get from new DVDs, including higher-priced Blu-ray discs, is $10.59, while marketing the same film through Apple Inc.'s iTunes online music and video store gets them $9.29, 12 percent less.

Other analysts did not agree with DiClemente on his foreseen grave outcome for the entertainment industry, but said they have the same concerns about the technological shifts faced by the industry.