Strike May Rewrite Stocks' Script
Over a month ago, film and TV writers in Hollywood and New York City went on strike. Now, Wall Street is starting to take them seriously.
With fresh memories of the auto industry's relatively tame labor negotiations in Detroit, analysts initially wrote off the writer's strike as a feud between show business types that would have little financial impact on the nation's giant media conglomerates.
But negotiations between the Writers Guild of America and the Alliance of Motion Picture and Television Producers broke down last week, and production of nearly all scripted network TV shows has ground to a halt. Now it appears that the logjam will persist well into 2008, threatening to push an already gloomy revenue forecast for the industry off a cliff.
"This has already gone on longer than many of us suspected, and it will catch up with these companies at some point," says Frederick Moran, analyst with the Stanford Group Company."To the degree that there is a lack of new quality programming, viewers will get impatient with the quality of TV shows," Moran says. "While it's difficult to pinpoint the financial impact, we could certainly assume that TV ratings will go down and revenue along with them, so this is an overhang of concern that probably is not fully reflected in stocks of media and entertainment companies."
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