Media stocks slide despite tax credits in bailout
LOS ANGELES (Hollywood Reporter) - The financial bailout bill signed into law last Friday included several tax credits for movies and TV, but Wall Street did not show its appreciation where prices for media stocks were concerned.
The Dow Jones Industrial Index and Nasdaq stock market each ended this past Friday down 1.5 percent, and The Hollywood Reporter Showbiz 50 did worse, falling 2 percent.
The Showbiz 50 has lost 13 percent in the past week, while the S&P 500 lost 9 percent.
Media stocks are doing poorly, experts said, because with the economy hurting, businesses will rein in advertising spending. With digital video recorders and so much new media vying for attention, some worry that businesses that cut back on TV and radio ads might make their decisions permanent.
The bailout bill is expected to save the film and television industries $487 million over 10 years.
The measures passed Friday have been floating around for months but haven't made it into law despite passing House votes on three occasions since May.
The provisions weren't in the first bailout bill, but they were in the version that passed Friday.
Generally speaking, the new law extends tax benefits that movie production entities have enjoyed since 2004 to distributors as well.
It also will recognize that studios often hire non-W-2 employees, give tax breaks on income from the licensing of copyrights and trademarks and allow for advertising income for content shown on the Internet to be eligible for incentives.
Another section, dubbed the runaway production statute, gives tax breaks on the first $15 million of production costs to those filming in the U.S.
The provision also is extended through December 2009 while it otherwise would have expired at year's end, and its benefits are retroactive to January.
Reuters/Hollywood Reporter
