Big entertainment companies are feeling the hit from the “possible recession.” Consumers aren’t as quick to spend their money on the entertainment industry. Movie ticket prices are up and cable bills are topping $100 a month. Many companies rely on DVD sales, which are declining when it may be cheaper to just rent the movie.
Goldman Sachs just cut it’s stock targets for the entertainment industry by 10% to better reflect the upcoming recession.
The companies taking the hardest hits are CBS, Disney, and Viacom. All these companies rely heavily on ad revenue.
Bernstein analyst Michael Nathanson says Disney could see a 12.3% drag on earnings since the majority of the revenue comes from advertising and theme park sales. Even though it’s fiscal first quarter earnings showed no decrease.
Other companies like NBC universal has helped it’s business by branching out to nations all over the world. So it may thrive in nations with a thriving economy.
In the entertainment industry it may just come down to where the companies bring in the most revenue.
It all depends where their money lies.
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