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Strike May Rewrite Stocks' Script

Disney's ABC held two new scripted shows, "Cashmere Mafia" and "Eli Stone" for midseason, but it's also launching reality experiments like "Dance War: Bruno vs. Carrie Ann" -- a "Dancing with the Stars" spinoff -- and "Oprah's Big Give," a show documenting Oprah Winfrey's efforts to help people.

Analysts agree that CBS is the most vulnerable media stock if the strike persists, since it's the company most heavily levered toward network ad revenue. Also, its TV broadcast division has little in the way of scripted TV held over for midseason.

That said, NBC is the most vulnerable network in terms of ratings performance, and GE is already facing intense pressure from investors to spin off the media division. A protracted strike could only ratchet up that pressure even further.

All this comes against the backdrop of an advertising malaise weighing on the industry that has been exacerbated by the rise of Internet giants like Google (GOOG - Get Report) and Yahoo! (YHOO). Most economists agree that the U.S. credit and housing mess has raised the odds of a recession in 2008, threatening to make things even worse.

"The writers' strike doesn't totally devastate the outlook for these companies financially, but it makes it tougher to show growth in an already depressed environment for advertising demand," says Moran.

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