The strike by the Writers Guild of America, which has crippled production of TV show and films, is likely to end this week, according to several media sources. The division between the writers and studios over revenue from internet content appears to have been addressed. According to The Wall Street Journal (subscription required), "in discussions between the studios and the Writers Guild, one particular issue was the money a writer makes when a television show is streamed on the Internet with advertising. The writers won a 2% share of a distributor's gross in the third year of the contract."
Now Wall Street can turn to the issue of whether the weakness in big media company shares may begin to abate. Stocks of companies with large TV and film revenue may get a boost from the news. That may only be temporary if a recession claims growth in TV ad dollars and studio ticket and DVD sales.
CBS (NYSE: CBS), Disney (NYSE: DIS), and Viacom (NYSE: VIA) have all traded down since Christmas, though several large media companies say that they are not seeing slowdowns in their businesses.
But, advertising cannot escape a share slump, so settling the writers strike may do very little for shareholders this year.
Douglas A. McIntyre is an editor at 247wallst.com.
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