Markets take a hit Monday
Media stocks at new lows on tough trading dayMarkets tumbled worldwide Monday, with media and entertainment stocks around the globe taking a bath and hitting new lows, amid spreading fear that the U.S. banking bailout won't be enough to avoid an extended global financial crisis and recession.
In the end, the U.S. escaped relatively unscathed after a late rebound. At one point Monday, the Dow was off more than 800 points, diving under 10,000 to its lowest level in five years. The S&P 500, the Nasdaq and The Hollywood Reporter Showbiz 50 looked even worse off, but all indices staged a late comeback.
The Showbiz 50, down 11% in early trading with all 50 stocks in retreat, staged a dramatic rally into the closing bell.
The fear gripping markets Monday was reflected in a CNN/Opinion Research Corp. poll, which surveyed more than 1,000 Americans during the weekend. It found that 21% see an economic depression as "very likely" and another 38% see it is somewhat likely. The survey also found that 29% feel a depression is not very likely, while 13% see it as not likely at all.
At the end of the day, the THR entertainment stock index outperformed the broader markets -- a rare occurrence in recent weeks -- losing 3.2%. By comparison, the Dow was off 3.6%, the S&P 500 finished down 3.9%, and the Nasdaq shed 4.3%.
The top Showbiz 50 loser Monday was Imax, down 15% despite the company's unveiling of a new debt-refinancing package with the Bank of Montreal.
A couple of radio stocks followed right behind. Sirius XM lost 14% of its market value, and Entercom Communications was down 11%.
DreamWorks Animation, one of the rare gainers year-to-date, lost 7% on Monday, while Netflix sunk 9% after cutting its revenue and subscriber guidance for the year. It blamed the cuts on -- what else? -- the weak U.S. economy.
At the other end, TiVo led the Showbiz 50 gainers, with a 1.8% increase spurred on by the U.S. Supreme Court's decision not to hear Dish's and EchoStar's appeal in a long-running patent dispute.
Dish and EchoStar, now separate companies, will pay TiVo $104 million in the next few days, but the larger issue -- whether Dish must disable more than 4 million of its customers' DVRs -- remains unresolved.
Apple was the second-best performer, up 1%. RealNetworks, CBS Corp., Viacom Inc. and Lionsgate also were up fractionally. All other stocks in the Showbiz 50 were down.
Time Warner was hit hardest among the conglomerates, with its shares dropping 7% to $11.23 after hitting a new 52-week low at $10.86.
Also falling to 52-week lows Monday were News Corp., Yahoo, Google, Grupo Televisa, Electronic Arts, THQ, Sirius XM, Sony, Sinclair Broadcasting, Liberty Media, Knology, Imax, Hollywood Media, Entercom, Dolby and Dish.
NBC Universal parent General Electric was hit by the same fate, though it recovered significantly Monday to $21.38 after having traded at $19.69, its lowest point in 11 years.
European sector giants also felt the sting as markets across Europe tumbled to their lowest point in four years.
The pan-European FTSEurofirst 300 index fell 7.8% to 1,004, a bigger drop even than the 6.3% collapse following the Sept. 11 terrorist attacks against the U.S.
Shares of German pay TV group Premiere, which issued a profit warning last week and may be looking at an accounting scandal, shed 31% on Monday, and Pan European broadcaster ProSiebenSat.1 fell 15%.
London's FTSE 100 was down 5.8% at 4,589, with media stocks hit hard. Shares in British commercial broadcaster ITV were down 8% despite rumors of a possible takeover offer emerging from RTL parent Bertelsmann, while BSkyB was down 6% despite the pay-TV giant's limited exposure to ad markets.
Asian media stocks also took a bath Monday, with shares of Indian cinema chain Adlabs, Indian film distributor Eros and Chinese Web portal Sohu diving deepest.
Shares of Mumbai-based Adlabs, the largest cinema owner in India, closed Monday down 12% on India's national Sensex exchange, marking its lowest level in two years. Adlabs is owned largely by Reliance Big Entertainment, Steven Spielberg's new $550 million film partner.
Shares of Eros, the largest purveyor of Indian films overseas, lost 9% on Monday.
Even though the Indian government has begun to pay its workers three years of back salaries and approved pay increases, many Indians are more worried about record inflation, which, could cause them to shut their wallets tight, said Gunjan Bagla, a Los Angeles-based expert on the Indian economy.
North of the border, Canadian broadcaster CanWest Global Communications saw shares fall 15% to CAN$2.21 ($2.04). Cable operators also were hit, with Rogers Communications, the country's largest, seeing its stock fall 5%, while Shaw Communications lost 3%.
Meanwhile, some Wall Street observers expressed hope that U.S. stock markets would reach a bottom soon.
"An equity market bottom appears to be forming," Tobias Levkovich, Citi Investment Research's chief U.S. equity strategist, said in a report. "The combination of nonfinancial cash holdings to equity market cap levels, peaklike volatility, typical market pullbacks around recessions and the sense of resignation within investor sentiment all suggest that stock prices are near a bottom."
Jonathan Landreth and Georg Szalai in New York, Etan Vlessing in Toronto and Mimi Turner in London and Scott Roxborough in Cologne, Germany, contributed to this report.