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LOS ANGELES (Hollywood Reporter) - A day before striking Hollywood writers were set to reconvene contract negotiations with the studios, a Wall Street firm said Monday it would cut its earnings forecast on media conglomerates if the walkout 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 Corp., Time Warner Inc., Walt Disney Co., News Corp. and Viacom Inc. But owners of broadcast networks would be hurt first and CBS the most, Natixis said.
"Assuming the strike costs (Disney's) ABC, CBS and (News Corp.'s) 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 General Electric Co., whose NBC Universal unit operates the NBC broadcast network.
The Writers Guild of America strike marks its 30th day Tuesday, with the parties returning to the bargaining table after a few days' break.