Media companies took a hit along with the rest of the U.S. stock market on Monday as jittery investors reacted to Standard & Poors' credit downgrade after market close on Friday, and teetering world markets.
The Dow was down 634.76 points, or 5.55 percent, to 10,809.85 — the first time it has closed below 11,000 since Novermber. CBS, which is more dependant on advertising than other, more diversified companies, was hit hard again on Monday, once again falling more than 10 percent.
But nobody escaped. Sony dropped 6.35 percent, Time Warner fell 5.8 percent and News Corp dipped 7.65 percent.
Apple, which got off more lightly than most traditional media stocks in last week's bloodbath, fell 20 points to close down 5.46 percent.
The numbers are terrible on their own, but they’re compounded by Thursday’s 512.53 point, or 4.31 percent drop in the Dow – the worst single-day selloff since December 2008.
President Obama attempted to calm nervous investors with a televised address, but even as he spoke, markets continued their freefall.
Thursday’s tumble was in anticipation of the next day’s unemployment numbers and was a response to the resolution of the debt ceiling crisis. It also reflected worry about the Euro zone debt crisis. Monday’s was a reaction to Standard & Poors’ decision on Friday to cut America’s credit rating from AAA to AA+, as well as the continuing Euro zone crisis.
International markets had as bad a day as domestic. In London, the FTSE 100 closed lower than it has since July 7, 2010 – falling 178.04, or 3.4 percent, on Monday. The FTSE volatility index, which attempts to measure investor fear, was up 28 percent. The Nikkei was down 202.32, or 2.18 percent.
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The numbers are likely to have a more immediate impact on television than on motion pictures. Networks did especially well during this year’s upfronts, with the five major networks netting $9.2 billion in commercial time during the selling season. But advertisers have cancellation options, and as companies shed value and executives worry about the wobbly economy, they may exercise those options.
For the movie business, there are a number of questions: Will investors continue to put money into motion pictures? And with peoples' portfolios bleeding value, will consumers continue going to the movies?