Natixis Media & Entertainment looks at the WGA strike


Alan Gould, Media Analyst at Natixis Bleichroeder, released a report on the ongoing WGA strike. Nataxis hosted a conference call with Chuck Slocum, Associate Executive Director of the WGA and John Bowman, negotiating committee Chairman for the WGA.  Their primary conclusion from the conference call and other contacts is that the strike is beginning to have an economic impact on the television business, will shortly begin impacting the film side, and, if not resolved, will impact their estimates for 2008. Excerpts:
“Network ratings are already depressed.  Overnight ratings (excludes DVRs) for the Big-4 networks are down 8% for the November sweeps, with ABC in first place, down 10%; CBS in second place, down 8%; NBC in third place, down 14%; and Fox in last place, but up 3%.
Both sides are expected to come back to the bargaining table [today].  If this strike continues past Christmas, we will have to start cutting our EPS estimates for the television companies.  Assuming the strike costs ABC, CBS and Fox each 100 million of revenue and income off of their 5 billion–6 billion of TV network and station businesses, the impact would be 0.09 per share off of our 2008 CBS estimate of 1.95; 0.03 per share off of our DIS fiscal 2008 EPS estimate of 2.30 and 0.02 per share off of our NWS fiscal 2008 EPS estimate of 1.20.  In addition, we note there has been softness in the DVD business.”