Media Watch: Stock Market Hits Hollywood Hard

by Jacob Combs
August 5, 2011 7:01 AM
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U.S. stocks rose Friday after some optimistic news from Europe following this week's steep stock market slide. Not surprisingly, this week's dizziness-inducing economic slingshot has been felt in cities all around the world, not least of which is Hollywood.

Thursday's world-wide selloff--the worst since 2008--hit media companies especially hard. Hollywood is vulnerable in two regards: companies that depend on advertising revenue, and movie deals that are currently in the works. As film finance expert Jeff Steele told TheWrap, investors that are tied to traditional markets like Wall Street could spook at the stock market drop and back out of film deals they had been considering.

Companies that are more dependent on advertising are more likely to lose in the current economic environment. CBS fell 9.3 percent on Thursday, while Viacom lost 6.1 percent. Sony's shares hit a 52-week low, while Walt Disney and Time Warner finished below their 2010 closing prices.

Still, Steele says the stock market downturn might be an opportunity for investors looking to get into the media world to get a bargain in the process. Some see a chance for a wealthy tech titan (Apple, Google, Facebook), which have already had some success in their own right as content distributors, to acquire one of the entertainment industry's big names.

More: Media, Cash Crunch, Studios

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