Bear Sterns view of WGA strike

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"From Wall Street's perspective, we estimate the impact of accepting the [writers'] proposal is largely negligible," Bear Stearns wrote in a report last week.

If the AMPTP gave the striking WGA everything its negotiators are asking for, the world-renowned banking, brokerage and investment firm estimates that "the $120 million figure would carry an average impact of less than 1% on annual earnings per share for the media companies.

"That does not factor in any concessions by the writers' side (the WGA), where the principal issue is a desire for a piece of ad dollars from new-media distribution. The potentially small financial impact suggests that studios (Alliance of Motion Pictures and Television Producers) are more concerned about setting a precedent in new-media revenue sharing."

According to Wikipedia, Bear Stearns had total capital of approximately $66.7 billion and total assets of $350.4 billion as of November 2006. According to the April 2005 issue of Institutional Investor magazine, Bear Stearns is the seventh largest securities firm in terms of total capital.

comment #1

Gordie Lachance says ...

Thank you. This is exactly what I said yesterday in response to the Cieply article.

The writers got fooled in '88 when the AMPTP was "setting a precedent" regarding VHS residuals.

It's not going to happen again.

comment #2

Mumbleboy says ...

That's not very surprising to me. From everything I've read, it never seemed that the writer's demands were that outrageous. Even if the studio's are being hardnosed with the writers to avoid setting a precedence, what's the worst that would happen if the SAG, DGA, and WGA all got similar deals. Less than 3% per share. And that's would keep me fat with new episodes of Lost and Jon Stewart. Sounds like the studios just don't want to share any of their pie. They're just the bakery, the pie is delicious without them.

First time poster. Long time lover... I mean reader.

comment #3

Michael says ...

Well I feel better now, and so should the studios. I mean, Bear Sterns did such a good job with their handling of mortgage assets (read those reports for high comedy)...

Yet I still want the writers to win. But not because Bear Sterns said so.

comment #4

Jay T. says ...

I have to say, I'm proud of the WGA for holding out this long. The studios and networks are really going to regret being so stubborn. All of this "we're willing to scrap the next entire TV season" is total bullshit and I think the WGA knows it and will call their bluff. Meanwhile, for those of us who publish on the web, it's "great" news because those ad dollars being pulled from television will need to go somewhere.

comment #5

truefaith says ...

I just read in EW that the major Hollywood studios made over 1 billion dollars in just the foregin receipts alone! (WB made over 2 billion dollars and is looking to make more after I AM LEGEND has run its course). Hollywood has the money to pay the writers.

comment #6

christian says ...

So who will go broke if a few pennies are tossed at the writers?

comment #7

Sean says ...

So does this mean that Bear Stearns has proof that the studios are already making money off of the Internet?

Because if they aren't, then giving up a percentage of the Internet profits before they even start to make a profit wouldn't "cost" the studios anything; they wouldn't have lost anything which they already had (this press release is still shaping it as if the writers are trying to take money out of the studios pockets when they are merely trying to get a share of the money before it gets to the studio).

And if they are already making money off of the Internet, then that should be pointed out every time they publicly lie and say they can't figure out any way to make money off of Internet distribution.

comment #8

delbomber says ...

Data from 2006 (or 2005!) is akin to prescribing drugs to a patient today based on his symptoms three years ago.

Bear Sterns is still very, very big, but anyone who owns a sliver of BSC will tell you this is NOT November of 2006.

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