Huge media stocks, already near lows, could get injured by new strike

15 06 2008

Huge media stocks, already near lows, could get injured by new strike

Posted by: in Marketing and Advertising

Filed under: Forecasts, Time Warner (TWX), Marketing and advertising, Employees, Viacom (VIA), CBS Corp ‘B’ (CBS)

Another strike for the entertainment industry. And, it comes just as a recession threatens to cut into TV ad revenue and movie ticket sales. That is not good news for companies like CBS (NYSE: CBS), Viacom (NYSE: VIA), and Time Warner (NYSE: TWX), which already trade near 52-week lows.

Investors are understandably worried that consumer concerns could hurt entertainment spending. Who has extra money to see “Spider-Man XII”? Marketers often cut budgets for high-priced broadcast Television ads when the economy looks grim.

Now, the Screen Actors Guild might go on strike when its contract runs out on June 30. According to The Wall Street Journal (subscription required), “The two sides have made tiny progress on key issues including compensation for actors when their work is used on DVD or new media such as the Internet.”

Once again, the web comes up as the one thing entertainment companies should fear. It has been used for illegal downloads of music and movies. Many younger people would rather hang out on YouTube than watch pay-per-view movies on the web. Now, actors want a portion of internet revenue.

If the actors are not careful, while they are on strike and the entertainment world is shut down, the web will eat the whole industry.

Douglas A. McIntyre is an editor at 247wallst.com.