Grim numbers cast a shadow over showbiz Monday as Wall Street endured a historic day of turmoil.
The Dow’s 504-point drop — the worst one-day percentage decline since July 19, 2002 — followed Sunday’s triple-whammy of Lehman Bros.’ bankruptcy, Merrill Lynch’s sale to Bank of America and AIG’s flirtation with disaster. The S&P 500 also dropped almost 5% on the day.
Given how much damage the media and entertainment sector has already sustained during this economic downturn, though, most vets don’t see the latest news as a particular reason for despair. It certainly proved a major distraction during the day as execs dealt with fall TV and movie launches and prepped for Sunday’s Emmy Awards.
The McCain and Obama campaigns, just 50 days short of Election Day, also were thrown a major curveball.
Few stocks survived without serious damage. Most congloms shed a few percentage points, though the wreckage wasn’t nearly as dire as the 58% dive by AIG shares as the firm sought the intervention of the Federal Reserve.
And the coverage of Wall Street’s slide was equally frenetic.
CNBC scrapped its regular Monday primetime programming for a pair of live, two-hour specials on the crisis — one focusing on the extent of the trouble and what it means for investors, followed by another on the impact in Asia.
The regular cablers — CNN, Fox News Channel and MSNBC — all followed the story but switched between two other major stories: the aftermath of Hurricane Ike and the ongoing presidential campaign.
As witnessed by some more hopeful signs in the entertainment sphere, including robust TV ratings and high spirits among financiers at the Toronto Intl. Film Festival, capital still exists to fund the creation of entertainment. But finding the path to profit is another story.
“There’s lots of money in the world,” Wachovia prexy and chief exec Robert Steel told Jim Cramer on CNBC. “There are sovereign wealth funds, money market funds, savings. We just need to get back to a position of confidence through transparency and sound management.”
Many in the biz pointed out the irony that just last summer Lehman media analyst Anthony DiClemente was raising the ire of the media congloms with a bleak revenue forecast for the sector. While DiClemente’s fate isn’t certain, Lehman’s bankruptcy, hastened by some $60 billion in exposure to subprime loans, has surpassed Enron’s to become the largest in U.S. history.
“How anxious you are today really depends on what kind of shape your own balance sheet is in,” said one media topper. “In terms of slate deals, a lot of the studios closed those deals a couple of years ago, so the banking situation has already been digested to some extent.”
Another exec at one of the top media congloms said most of the major firms had diversified their banking relationships enough that the musical chairs were not a direct threat. “We’re also in a business of constant change,” the exec said. “Studio executives get hired and fired, consumer habits shift, genres go in and out of style. It’s worrisome, obviously, but the mood isn’t dismal here.”
The credit crunch, the weak dollar and spiking oil and commodities prices caused more intense angst for media congloms earlier this year, woes accentuated by Bear Stearns getting swallowed up by JP Morgan Chase.
Major Wall Street firms called on the Fed to lower interest rates Monday, a move they say will help stabilize the dismal housing situation and improve overall confidence in the economy.
A consortium of banks including Bank of America, Barclays, Citibank, Credit Suisse, Deutsche Bank, Goldman Sachs, JP Morgan, Merrill Lynch, Morgan Stanley and UBS pooled resources and pledged some $70 billion to help troubled banks stay afloat. Still, Steel fended off rumors of a takeover of Wachovia by JP Morgan Chase and downgrades hit Washington Mutual on Monday as speculation centered on which bank could be next to fall.
For the news biz, especially those focused on finance, the events of Sunday and Monday proved irresistible. Cable news had Hurricane Ike and the presidential race to focus on, but Fox Business, CNBC and Bloomberg hammered away at the crisis.
Some programs were extended and others bumped entirely as the carnage in the stock markets continued. FBN’s “Bull and Bears,” for instance, ran an extra hour, as did FBN anchor Neil Cavuto’s show. FBN and other nets also had correspondents staked in front of Lehman Bros. and inside the New York Stock Exchange.
The broadcast news nets — ABC, NBC and CBS — all broke into daytime programming for a special report around 11 a.m. to carry President Bush’s statement live. But other than the evening newscasts, which concentrated heavily on the story, no specials were planned. However, NBC’s Brian Williams was set to anchor the “Nightly News” broadcast from CNBC’s studios in New Jersey.
CBS carried ongoing news on its Website. ABC’s “Nightline” also picked up the story Monday night, and “Good Morning America” was slated to follow it on Tuesday morning.
NBC’s “Today” show straddled Ike and Wall Street on Monday morning, with Matt Lauer reporting from Texas and Meredith Vieira from Wall Street.
Monday was either an ideal or nightmarish day for Slate to launch the Big Money, its finance-oriented spinoff. Editors made the case that the crisis would drive traffic to the new site. But financial outlets, especially in print, have generally suffered as advertisers creep to the sidelines.