Strike May Rewrite Stocks' Script

Most media giants have seen their stocks decline since the strike began. While the drops have come amid selling in the broader stock market indices, which have been buffeted by continued credit concerns in the financial sector, they have been steeper than the rest of the market's.

Since Nov. 5, the S&P 500 has shed roughly 3.7%. Meanwhile, shares of CBS (CBS Quote) have dropped 5.7%; Disney (DIS Quote) has lost 3.9%; News Corp. (NWS Quote) has shed 6.5%; and Time Warner (TWX Quote) has fallen 8.1%.

Viacom (VIA Quote) has avoided the selloff, rising 4.3% for the period, but General Electric (GE Quote), owner of NBC Universal, has dropped 9.3% since the strike began.

NBC, which was mired in a ratings slump even before the strike hit, has taken the extraordinary step of giving advertisers cash back for primetime ratings shortfalls rather than compensating them with "make goods," or additional TV spots.

Jordan Breslow, director of broadcast research with MediaCom, says he expects other networks to take similar steps, and if the strike lingers on, he says the networks may cancel the "upfronts," the annual confab between the media networks and Madison Avenue that usually amounts to entertainment, nightly parties and an orgy of ad spending.

"The networks' press tour in January has already been canceled, so there may be no pilot development," says Breslow. "There may be no upfront, because they have nothing to show. They may just rely on phone conversations and going one-on-one to each of the agencies and saying 'this is what we have.' I hope it doesn't come to that but it's very likely."