inside track


This year featured many of the same challenges for the Big Seven media and entertainment companies as 2007 — and took many of them to a new level of intensity.

The financial crisis was a main catalyst for the mayhem, and its fallout continues to have ripple effects on sector giants.

Advertising woes increased amid the crisis and as economies worldwide were confirmed to be in recession. Merger activity, which can fuel financials and stocks, practically came to a halt as the credit crunch intensified. The U.S. auto industry, one of the largest advertisers, ran into trouble, putting another drag on the ad market that all media biggies' financials depend on, to different degrees.

Add in continuing softening of the DVD business, labor unrest and the challenges of the digital transformation, and you understand why media and entertainment blue chips sang the blues again in 2008.

While none of the sector conglomerates is alike, The Hollywood Reporter for a second year in a row takes a look at their performance in key businesses. We again put under the magnifying glass their stock performance and operating profit growth or decline in key entertainment units for the first three quarters of 2008.

The companies won't report financials for the important holiday season until late January or early February, so the picture isn't complete. But it does allow for a first feel for how 2008 shaped up for the media giants.

THR offers an overall rating based on this analysis. We gave a point each for profit growth in any key segment and also would have given a point for stock gains (which no company provided). We rounded up to the next full or half point if a company made significant strides in important areas.

Today, we put Disney, Sony and NBC Universal in focus. Look for analysis on Time Warner, News Corp., Viacom and CBS Corp. on Wednesday. (partialdiff)