Global woes reach Wall Street
Interest rate cut softens blow but showbiz giants still hit hardThe Hollywood Reporter Showbiz 50 stock index hit a 52-week low Tuesday before recovering some of its lost ground, mirroring broader U.S. markets as they returned to action following the Martin Luther King Jr. holiday that saw global markets battered.
Sector giants News Corp., Time Warner, Disney and CBS Corp. all hit 52-week lows during the trading session before closing with lower declines.
Helped partly by a surprise 0.75 percentage point interest rate cut by the Federal Reserve, major indices rebounded from an early bloodletting, even though some on Wall Street immediately called on the Fed for another 0.50 point cut at its regularly scheduled meeting next meeting.
The Showbiz 50 closed at $1,115.24 after going as low as $1,073.17 intraday.
The red of the day's losers on the index easily outweighed the green of the gainers, which were led by Blockbuster, up 9.3% and Warner Music Group, up 6.5%.
TiVo rose 2.6% as the fourth-largest gainer of the day unveiled a long-anticipated rollout of a service partnership with cable giant Comcast in Boston, followed by other markets. Several years ago, Comcast became the first cable partner for TiVo.
The day's biggest losers were Live Nation, off 9.9%, Dolby Laboratories, down 8.8%, and Carmike Cinemas, which lost 6.8% of its market value.
Among media giants, Sony and Time Warner were hardest hit.
TW shares hit a 52-week low of $14.87 intraday before ending down 2.3% at $15.18.
Sony's American depository receipts declined 2.7% to $50.06 on Tuesday, while its Tokyo-listed stock fell even more. The stock was one of the best performers among big media and entertainment stocks last year.
Disney also set a 52-week low Tuesday at $26.30 before recovering a bit and finishing down 1.4% at $28.12.
Goldman Sachs analyst Ingrid Chung on Tuesday came out in defense of Disney, reiterating her "buy" rating and $39 price target on the stock. "We believe Disney shares have largely priced in a macro slowdown," she said.
News Corp. and CBS Corp. also joined the lineup of stocks hitting lows for the past year. News Corp. voting shares lost 1.6% to $19.05 after dropping as low as $17.97 earlier in the session. CBS Class B stock went down to $22 before ending 0.9% lower at $22.88.
Asian media and tech stocks drowned alongside other sectors as benchmark markets across the region tumbled for a second day in a row.
Japan's Nikkei index fell 5.7%, its biggest one-day percentage drop since October 1998.
Sony Corp., export-driven and heavily exposed to the U.S. market in its movie, gaming and electronics divisions, saw almost 7% of its valuation wiped out in Tokyo.
"We're monitoring the situation closely but it's too early to say what, if any, long-term impact these market conditions will have on Sony," a company spokesman said. "This will no doubt be a topic at the press conference when our results are released next week."
Sony's fiscal third-quarter results will be released Jan. 31 in Tokyo.
Meanwhile, China Mobile, the largest handset provider to the world's No. 1 cell phone market, shed 7.5% of its value in Hong Kong.
In India, the Bombay Stock Exchange index Sensex continued to slide Tuesday after bringing in its deepest single-day decline ever Monday.
"This crash is not sector specific but across the board," PricewaterhouseCoopers' Mumbai-based entertainment division leader Timmy Kandhari said.
Among the hardest hit in India was Mumbai-based diversified film company and multiplex operator Adlabs Films, whose shares touched a low of Rupees 650 ($16.51) before closing at Rupees 911.85 ($23.16).
Kandhari said the correction would take more time. "After all, due to the frenzied bull run of the past, most stocks, including media and entertainment, were overvalued," he argued.
Nyay Bhushan in New Delhi and Gavin Blair in Tokyo contributed to this report.