Media Stocks Move Little

Shares of the major media conglomerates showed no significant reaction Monday in the wake of Friday’s settlement of a new contract with television and film writers, suggesting that investors believed the companies had little to lose if a deal hadn’t been struck, analysts said.

A limited work stoppage by writers would not have hurt the bottom lines of such studio parent companies as News Corp., Walt Disney Co., AOL Time Warner Inc. and Viacom Inc., according to the analysts.

The companies with television networks would have suffered the most in a strike, with little scripted programming available for the coming fall season. But though a strike might have led some viewers to shift from broadcast television to cable, many of these companies own both, analysts noted.

“You’d be taking it from one pocket and putting it in another,” said Tim Spengler, director of national broadcast for Initiative Media in Los Angeles.

Entertainment stocks moved little Monday, the first business day after the late Friday announcement that the Writers Guild of America had a tentative three-year agreement with producers. The settlement package is worth an estimated $41 million for writers.

Guild members are expected to ratify the contract by June 4.

Not only could the large media companies absorb the effects of a strike, most would have experienced a short-term boost in revenue, said Jessica Reif Cohen, a media analyst with Merrill Lynch in New York, who noted that production costs would have dropped during a strike.

“If there had been a strike, it would have been a short-term positive for some of the companies,” Reif Cohen said.

Media stocks have lost value this year with advertising dollars plummeting, but that slide was separate from the possibility of a writers strike.

“Stocks had gone down because of concerns about the economy, and they are already recovering,” Reif Cohen said. “A settlement was pretty much anticipated. This basically took one cloud of uncertainty away.”

Disney, owner of ABC, inched up 8 cents to $30.99 on Monday. CBS owner Viacom was up 19 cents, closing at $53.39. News Corp., owner of Fox, moved up 57 cents to $39.32. MGM added 32 cents to $19.12. Vivendi Universal was down 15 cents to $67.95, and AOL Time Warner eased 10 cents to $52.10.

Also, General Electric Corp., which owns NBC, was up 3 cents at $49.96.

All trade on the New York Stock Exchange.

Sony Corp. jumped $1.83 to $81.80. The electronics company, which owns Columbia Pictures, announced a deal Monday to distribute a film on skateboarders of the 1970s with shoe maker Vans Inc.

The possibility of a writers’ strike had been dogging the networks as they prepared for this month’s critical sale of advertising for the fall season. The networks had prepared a backup schedule stocked with unscripted shows.

“Sales executives had been uncertain about whether they would have a contingency schedule or an actual schedule to offer,” said Jack Myers, chief economist for the Myers Reports. “It’s been a challenge, especially in the soft advertising market.

“The networks have been getting pretty banged around by advertisers because of the economy,” Myers said.

The threatened strike “wasn’t really that big of a deal in terms of advertiser demand,” Initiative Media’s Spengler said. “Marketers would still need to talk to an audience whether there was a strike or not. And we were pretty sure that if there was a strike, it would be a quick one.”

The cost of the settlement--an estimated $41 million over three years spread across all studios and networks--won’t require the companies to dig too deeply. Edward Hatch, a senior media analyst with S.G. Cowen, noted that the settlement package contained “better-than-expected terms” for the companies because writers had been seeking a package worth more than $100 million.

In any case, some analysts said Wall Street was happy a deal had been struck, even if the stocks didn’t surge.

“There’s no question there was a great sigh of relief,” said Christopher Dixon, media analyst with UBS Warburg in New York. “We still don’t know whether we’ll have actors,” referring to the unresolved contract between actors and studios. “But we do have scripts that will be written, and that’s a first step.”