Street sign: Long strike will hurt
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UPDATED 8:59 p.m. PT Dec. 3, 2007
In a report issued on the eve of reconvened negotiations between the WGA and studio reps, a Wall Street firm said Monday that it will cut its earnings forecast on media conglomerates if the writers strike drags into the new year.
Natixis Bleichroeder said in an investors note that "the strike is beginning to have an economic impact on the television business, will shortly begin impacting the film side (and) if not resolved will impact our estimates for 2008."
The investment firm said companies whose earnings could be hurt by a protracted writers strike include CBS, Time Warner, Disney, News Corp. and Viacom. But owners of broadcast networks would be hurt first and CBS the most, Natixis said.
"Assuming the strike costs ABC, CBS and Fox each $100 million of revenue and income off of their $5 billion-$6 billion of TV network and station businesses, the impact would be 9 cents off of our 2008 CBS estimate of $1.95 (earnings per share), 3 cents per share off of our (Disney) estimate of $2.30 and 2 cents per share off of our (News Corp.) estimate of $1.20," the firm said.
Natixis noted "some hope and speculation that the strike will be settled in the next few weeks." But it added that there was a "possibility that this strike could stretch out into 2008."
Longer-term impacts of the writers walkout include "accelerated migration of viewers from traditional media into new media," the firm said.
The firm did not cover any potential impact to '08 earnings at GE, whose NBC Universal operates the NBC broadcast network.
Separately on Monday, NBC Uni chief Jeff Zucker said it's too early to discuss how the writers strike might affect the next cycle of upfront advertising revenue. Zucker, speaking at the UBS investors conference in Manhattan, said the matter hadn't been discussed in the company's long-range planning.
NBC Uni's Television Critics Assn. presentations already have been called off with the news of the strike, and there has been grumbling on Wall Street and elsewhere about how the month-old strike would end up affecting development and pilot season.
"I'm not really ready to consider a prolonged strike of that magnitude," Zucker said.
If the strike does hurt the all-important broadcast upfronts, such impact might prompt changes in how network TV is developed, he added.
Zucker said there is no "grand rule" requiring networks to stage big programming presentations. NBC's traditional upfront hoo-ha might be nixed in the event of a protracted writers work stoppage, he said.
The NBC Uni topper said he hoped today's resumption of talks between the WGA and the Alliance of Motion Picture & Television Producers proves beneficial.
"I hope the two sides will begin a real dialogue," Zucker said.
The WGA strike marks its 30th day today, with the parties reconvening negotiations after a pause for guild caucusing since Thursday. The writers' last AMPTP contract expired Oct. 31.
Carl DiOrio reported from Los Angeles; Paul J. Gough reported from New York.