The Dow Jones Industrial Average suffered its worst point loss ever Monday after the House of Representatives rejected a widely debated Wall Street bailout proposal.
In percentage terms, the Dow’s decline of almost 7% was the worst since Sept. 11, 2001. Having shed 777.68 points for the day, the index settled Monday at 10,365.45.
The day stirred memories of the famous headline “Wall Street Lays an Egg” that ran in Variety on Oct. 30, 1929, following a record 13% single-day drop for the Dow on Oct. 28 and 12% on Oct. 29. The present-day lack of liquidity, unavailability of credit and ongoing runs on banks (CitiGroup swallowed up Wachovia, the latest megabank to fall) are all at their worst levels since the ’29 crash.
Media congloms such as Time Warner, Viacom and Disney all saw their stocks suffer single-digit-percentage drops Monday, but the damage was worse for cable and satellite operators, which are seen as more vulnerable to changes in consumer confidence. Comcast shares, for example, fell 13% to $18.01. Dish Network, whose day began with a downgrade by Deutsche Securities, plummeted 18% to $19.97 a share.
Except for Disney, major media companies are all trading at 52-week lows. Viacom is at $23.66, Time Warner at $12.90, News Corp. at $12.07.
The House vote against the bill — 228 to 205 — created major complications for the markets, the economy and any candidate facing election.
The Jewish holiday of Rosh Hashana will delay a full House vote until at least Thursday.
“It’s important for the American public and the markets to stay calm — because things are never smooth in Congress — and to understand that it will get done,” Barack Obama said at an appearance at a Colorado high school. “We are going to make sure that an emergency package is put together, because it is required for us to stabilize the markets.”
John McCain delivered some prepared remarks to reporters during a campaign swing through Iowa. “Now it’s time for all members of Congress to go back to the drawing board,” he said. “I call on Congress to get back obviously immediately to address this crisis.”
All major market indices, except for gold futures, posted steep drops. The Nasdaq fell almost 200 points, or 9.1%, and the S&P 500 dropped 8.8% — its biggest decline since the crash of 1987.
Everyone in the media and entertainment biz — and not just in the already battered financing sector — is having to rethink strategies. Not only will dealmaking be all but impossible through at least the end of the year, but questions of appropriateness will be raised about all content.
Simply put, will auds steeped in the anxieties of this extraordinary moment in history crave escape, as in Hollywood’s Golden Age, or a digitized raft of how-to fare that will arm them for the financial future?
Summer B.O. and recent TV ratings have been solid, but the issue of how consumers will react to the worsening economy will remain central for a lot of major players.
In downgrading Dish Network, Deutsche Bank factored in “a full year’s impact of the poor economy and stepped-up competition.”
As big-picture questions loom, the cable news nets were in the trenches as the crisis evolved Monday. They tracked the failed House vote and ensuing market nosedive throughout the day, with business webs CNBC, Fox Business Network and Bloomberg going wall-to-wall with the story.
“It’s been all hands on deck,” said FBN director of business news Ray Hennessey, referring to the deployment of talent.
The story of the economic crisis hasn’t necessarily been an easy one to report, given that daunting numbers and abstract policy lie at its heart.
“The good news is that it’s like a plane crash in that it’s all right there in front of you,” Hennessey said. “The audience is very nervous. The best thing to do is just play it straight — tell people what happened.”
Jon Klein, prexy of CNN/U.S., agreed. “The trick is to boil a fundamentally complicated and confusing story down to its essentials,” he said. “Some of this stuff is mind-numbingly complicated, but boiling it down is what we’ve been doing, and we’re getting great viewership as a result.”
CNN’s “Anderson Cooper 360” normally draws between 500,000-600,000 in the key demo, Klein said, but Thursday night, when the program focused on the crisis, it pulled in more than 1 million.
CNBC also preempted its normal Monday programming for live, ongoing coverage of the crisis.
“This is my financial reporting nightmare,” said Steve Liesman, CNBC’s senior economics correspondent, referring to the heavy political component of the story.
As he got set to interview Secretary of State Condoleezza Rice on her interactions with foreign leaders over the crisis, Liesman tapped NBC’s longtime foreign affairs reporter Andrea Mitchell, who suggested questions to pose.
CBS, NBC and ABC each broke in with a special report during the 2 p.m. ET hour on the failed vote.
The general news cablers — MSNBC, CNN and Fox News Channel — also had ongoing stories of the election campaign and others to juggle. Klein said CNN was essentially prepared since “our regular programming is built around the principle that multiple things are happening in the world. That’s the concept behind ‘The Situation Room’ and ‘CNN Newsroom.’ ”
On a story like the meltdown, which blurs lines between economics and politics, reporters found themselves pulling double duty. Two of CNN’s campaign correspondents — Dana Bash and Jessica Yellin — covered both beats Monday.
The in-depth coverage is likely to continue, since House leaders in favor of the bailout bill could not twist enough naysayers’ arms for a revote. The substance of the bill will have to be changed.