November 21, 2008 / 9:01 AM / 11 years ago

Showbiz bulls still abound in battered market

LOS ANGELES (Hollywood Reporter) - As markets plunged again Thursday, some Wall Street experts were telling about 400 television executives that they are bullish on the entertainment industry.

The benchmark Standard & Poor’s 500 index fell 6.7% to its lowest level since 1997 — completing the erasure of more than a decade of stock market gains.

Some radio stocks slipped almost 30% on Thursday. Sirius XM fell 12.5% to its all-time low of just 14 cents a share. Television was similarly battered, with CBS sinking 16% to a historic low of $4.51 a share.

So maybe it was fitting that while the carnage was happening Thursday, the Hollywood Radio and Television Society was hosting an event called Wall Street’s View of the Future of Television.

While they disagreed on some minor details, the panelists came to the conclusion that entertainment will rebound and investors will make money again. Eventually.

The economy is hurting ad-supported models the most, but the movie industry should fare well in a U.S. or even worldwide recession, said Alan Gould, managing director at New York-based investment bank Natixis Bleichroeder.

His proof is that shares of Marvel Enterprises and DreamWorks Animation, a couple of near-pure-play movie content companies, haven’t been crushed as much as other media stocks. Marvel is off 11% so far this year, and DreamWorks down 18%. The S&P 500 is off 49 percent in that time.

Jeff Logsdon, managing director of BMO Capital Markets, agreed, noting that traffic at movie theaters hasn’t taken a hit despite the lousy economy.

Being a slight contrarian, Christa Thomas, managing director at JPMorgan Securities, said that the film industry is ailing a bit due to all the “funny money” that poured in from hedge funds and the like when capital was cheap and plentiful.

Ultimately, those investments amounted to dislocations that were “unhealthy for the business,” she said.

As recently as last year, film investors, some of whom were novices, were investing in iffy film portfolios figuring on the winners making up for the losers.

“That’s done,” Thomas said. “Now it’s back to basics.”

Stocks of media conglomerates, of course, have been decimated, but that’s because of their ad-driven businesses, as well as their international businesses that are suffering from a surging dollar. Investors also are leery of the theme park units.

Gould added that investors are selling Viacom stock because of fears that executive chairman Sumner Redstone might not be done selling his shares. Then he praised News Corp. chairman and CEO Rupert Murdoch for taking a long-term approach to running his business rather than focusing on quarterly results.

The panel was moderated by Lippin Group chairman and CEO Dick Lippin, who asked, “Do you believe in the entertainment industry?”

Answered Logsdon: “Yes I do. I mean, solidly.” Then — again alluding to how crummy the economy has become — he requested that the entertainment executives please greenlight even more escapist-type programing.

Reuters/Hollywood Reporter

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