Possible Hollywood Writers’ Strike Not a Star for Media ETFs

October 16, 2007 at 12:00 pm by Tom Lydon

Entertainment and media-related exchange traded funds (ETFs) could be in trouble if the Hollywood writers’ strike goes through as rumors are suggesting. The PowerShares Dynamic Media (PBS) is up 2.9% year-to-date and the PowerShares Dynamic Leisure & Entertainment (PEJ) is up 1.0% year-to-date. If the strike occurs, it could keep their performances low for the year.

The Hollywood networks and studios have been negotiating a new contract with the union that represents TV and film writers who are less than satisfied with the terms. A few of the major issues center around splitting revenues from new media and whether reality shows should be unionized. If union members give the OK, the Writers Guild of America could call a strike as early as Nov. 1, reports Scott Collins for the Los Angeles Times.

That is why TV and movie sets have been scrambling to produce as many shows or film as much as possible lately. In addition, if the strike were to go through, it would mean more reruns and reality shows, which are exempt from the strike because they don’t use guild writers. Both of those factors would mean losses for top holdings in PBS and PEJ such as CBS (CBS), DreamWorks Animation (DWA) and Walt Disney (DIS). Maybe we’ll be anxiously watching the performance of these ETFs instead of our favorite new shows soon.