Major entertainment and media companies saw steep declines in their stock prices Monday.
Those with broadcast or cable networks, especially Walt Disney Co. and AOL Time Warner, led the declines. Disney fell $4.33, or 18%, to $19.25. Viacom, owner of CBS, fell $4.89 to $32.80 , or 12.9%. All three companies are traded on the NYSE.
Analysts said the slide reflects expectations that media networks, which were collectively losing $100 million a day from 24-hour commercial-free news coverage, will take a hit in the next quarter. Investors also fear a bleaker economy could further weaken advertising spending and tourism.
"We were already mired in an recessionary economy, and Tuesday's incident has just exerted more selling pressure on the market," said David Miller of Sutro & Co. in Los Angeles.
Disney was hit hardest because most of its income derives from theme parks and media networks, which depend heavily on advertising revenue. Disney owns the ABC television network and ESPN and operates theme parks worldwide.
Disney lost $16 million in revenue from just the cancellation of Monday Night Football on ABC, Miller said. But he predicted the effect on Disney will be short-term. "In time people will return to the theme parks and to traveling," he said.
On Monday, Disney sold $1 billion of bonds to Goldman Sachs Group to help buy back some of its stock in the first U.S. corporate bond sale since last week's attacks.
"We decided it was the right thing to do in the market," Chief Financial Officer Tom Staggs said. "We wanted to help show the depth and resiliency of the market."
Staggs said it was too early to predict the short-term impact of the attacks on quarterly earnings.
Vivendi Universal stock took less of a hit, closing at $41.60, down $2.90, or 6.5%.
Vivendi does not own a major network but has a stake in USA Networks Inc., whose shares dropped $4.62 to $18.45 in trading on the NYSE.
Universal Studios spokesman Jim Yeager said "business is absolutely weaker than what it would normally have been" at Universal theme parks in Hollywood and Orlando, but he said it was too early to forecast long-term effects.
One of the bright spots in the entertainment sector was Viacom's Blockbuster video chain, and rival Hollywood Entertainment Corp. Blockbuster rose 65 cents to $19 in NYSE trading and Hollywood jumped $1.30 to $9.90 in Nasdaq trading.
"People have been staying at home, looking for distractions or a break from the nonstop news coverage, and I think videos are an outlet for that," said Blockbuster spokesman Randy Hargrove.